HOW TO PROTECT YOUR ASSETS DURING BANKRUPTCY: A LOOK AT US LEGAL SYSTEM
It is an obvious misconception that insolvency requires the loss of all of your assets. One can avail a wide range of exemptions for the protection of their property. When an asset is exempted, it shall be protected from being sold and no payment whatsoever is made to the creditors. The opportunity to avoid assets from being sold in bankruptcy usually rests upon the exemptions you have in the state where you live. More than one exemption guards a selected sort of belongings. For example, your house, car, or non-public belongings can be covered via means of exemptions. In a few instances, you could preserve the greenback quantity of an asset, and in a different instance, you could guard the whole price of the asset. In a few cases, you’ll want to apply for a “wildcard exemption” to guard a selected piece of belonging due to the fact no other exemption mainly addresses it. If you have the option of choosing which exemption scheme to use, you must select all of the exceptions for that scheme.
Exemptions available while filing a Bankruptcy claim under Chapter 7 of Title 11 of the US Code.
When filing a Chapter 7 bankruptcy which is also popularly known as liquidation bankruptcy, your bankruptcy trustee’s job is to make sure your creditors get paid back as much as possible. While only exempting a few things, your assets and real estate become part of a bankruptcy estate. The trustee has all the authority to sell the non-exempt property and distribute the proceeds to the creditors according to the orders of the court. The exceptions in Chapter 7 determine how much property and what property you can keep. The trustee will examine your equity in the property to determine whether to sell it. For example, if you owe a lender $ 5,000 on your motorcycle and the motorcycle is worth $ 15,000, the trustee will have to pay the lender $ 5,000 on the $ 15,000 and the motorcycle will only be worth $ 10,000 to the trustee. If there is a vehicle exemption of $ 10,000, the trustee cannot sell it to pay off creditors. If the automobile exemption fee is $ 3,000, the administrator can sell the vehicle, give the creditor $ 5,000, pay you $ 3,000, and split the rest $ 7,000 among the creditors, based on the creditors who must be paid.
Exemptions available while filing a Bankruptcy claim under Chapter 13 of Title 11 of the US Code.
In a Chapter 13 bankruptcy, you are totally protected from losing your assets, but you must reorganize your debts and pay them off in a three- to five-year timeframe. The quantity you owe to a certain creditors is determined by exemptions, but some payments, such as prioritized debts and bonded debts, must be settled wholly. Anyhow the trustee will not be selling your assets which are not exempted for repayment to the creditors. But you have to pay on behalf of the things which you want to retain in the above mentioned period, For example, if your income consents you to pay $ 1,000 per month for five years and your senior debt necessitates about half that amount, you still have $ 500 to pay off to unsecured creditors with your income. Suppose the value of your assets that are not exempted is $ 20,000, you will have to pay this quantity to unsecured creditors. You can pay this sum using the $ 500 of your income within 40 months.