How to Protect Assets during Bankruptcy?… The US Bankruptcy Code provides for any debtor the right to protect some of the necessary assets he will need when starting over. These assets are called exemptions and during the bankruptcy proceedings this will be protected from the creditors. There are properties you can keep regardless of its value and even debtors who owe large amount of debts can get to keep some of their most valuable assets.
Most of the time, the adage “leave it to the expert” has its advantages. In a bankruptcy case, a lawyer’s expertise is necessary to educate the debtor on how to protect assets during bankruptcy. Since the bankruptcy process involves intricate rules and provisions, a lawyer’s assistance will make things easier for the debtor. You cannot just a lawyer randomly, he must know the specific bankruptcy laws within your state, and most of all, he should be able to practice bankruptcy cases in your state.
Of the two bankruptcy options open for individuals, married couples, and head of households, Chapter 13 offers a better option when it comes to keeping your assets. Rather than liquidating the assets to repay debts, a repayment plan is used to give debtors the chance to pay all their debts. This way you’ll get to keep everything you own. For debtors really intent on availing of the Chapter 7 bankruptcy protection, exemptions that vary from state to state are imposed. There’re standard federal exemptions too, and the debtor is given an option to choose between the two that will suit best with his current financial status. Before making this decision, you must consult your lawyer. Additionally, you can consult an accountant on how to safeguard your retirement savings. The same as for other personal benefits, each state has different provisions for these benefits. Items like household goods without any resale value can usually be kept by the debtor. To facilitate easier identification of assets that are exempted from bankruptcy you can also make a list of assets and liabilities to serve as a guide.
It is also important for a debtor to immediately respond to the claims of the creditors 30 days after the 341 meeting. Once the debtor responds, he may immediately seek protection of his assets should there be no objections from the creditors; however, if there is, it is up to the debtor to defend his stand that the particular asset is beneficial for his survival.
There are some points you should remember when attempting to protect your assets during bankruptcy petition. It is detrimental for a debtor to transfer his assets to another person in the hope of preventing asset liquidation. Instead, this may cause a denial of your bankruptcy petition and may even lead to fraud charges.
Based on recent surveys, bankruptcy has been ranked as one of the top five life-altering events in an American household and others even consider take bankruptcy as the ultimate defeat in their financial status. It is always helpful to keep an open mind with regard to asset exemptions. After all, it’s not within your control anymore.