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What You Should Know About Listing Property in a Bankruptcy

Property in a Bankruptcy

When filing for bankruptcy, you will be required to list and value all your assets. The inventory is required whether you are filing for Chapter 7 or Chapter 13 protection. However, you may not have to hand over any asset to a trustee in Chapter 13 if you reach a repayment agreement. Even with the liquidation of assets, there may be some property that is exempt from bankruptcy proceedings according to state and federal laws.

Chapter 7

When someone seeks Chapter 7 bankruptcy protection, they must first fill out an inventory and valuation of all assets. Since assets will be liquidated to pay off debts, there are some personal assets deemed necessary for life that the debtor is allowed to keep. With a good attorney, the filer may be able to keep a majority of assets that would enable them to live and work.

With liquidation, the debt is absolved, meaning that the debtor no longer owes the debt. However, filing for Chapter 7 does not automatically mean that the debt will be discharged. An example is a lien against real estate.

Chapter 13

Just as in Chapter 7, when filing for Chapter 13 bankruptcy protection, all assets must be listed and valued. Since Chapter 13 is a realignment of debt, assets should not have to be handed over as long as there is agreement on how to pay for them. This type of filing is common for those seeking to protect their homes from foreclosure.

How to Protect Your Property

  • Timely payments
  • Budgeting
  • Saving
  • Monitor debt-to-income ratio

The best way to protect your property is to keep current on payments. Adhering to a budget is the best way to keep yourself out of a bad situation in which you feel there is no other recourse but bankruptcy. When you are following a budget, make sure you have a payment listed to yourself. Saving for rainy days should be your first payment of the month.

Pay close attention to how much debt you have accumulated compared to your income or ability to pay. There are several online resources to help you calculate your ratio. If you start to be concerned about your ability to pay, talk to the creditors about lowering interest rates or consolidating payments.

Despite our best intentions, life has a way of surprising us. Unexpectedly losing a job or getting a serious illness or injury and the associated medical bills can derail the most carefully laid plans. The good news is that you don’t have to figure it out by yourself. If you need help to understand your options, contact an experienced bankruptcy lawyer in Memphis, TN.

Thanks to Darrell Castle & Associates, PLLC for their insight into bankruptcy law and listing property.

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