A common worry for most people is that they will lose their assets if they file for bankruptcy. They envision all of their belongings being sold by the trustee to pay to their creditors.
This misconception is not true. Most people get to keep all of their possessions during bankruptcy. Various reasons will determine if you keep all of most of your assets.
- What type of bankruptcy you file
- If your debts are secured or unsecured
- Exemptions allowed in your state
- If you choose federal exemptions instead of your states
Chapter 7 Bankruptcy
In this type of bankruptcy, there are no payment plans like in Chapter 13 bankruptcy. Your property will be considered either exempt or nonexempt. Your state or the federal exemptions determine nonexempt property. Most states let you choose which set of exemptions work best for you and your situation. You can select either your state or federal; you will not be allowed to choose both.
When your assets are being valued for the purpose of bankruptcy, the determining factor of its worth is what the property can be sold for, not the original cost of the item. Common exemptions are the equity in your home or car, your household furnishings, and appliances, clothes, and jewelry.
Chapter 13 Bankruptcy
If you have a large amount of nonexempt property, you may want to file for Chapter 13 bankruptcy. In this type of bankruptcy, you keep all of your assets and pay on the value of the items. You will be required to make court approved payments for the predetermined length of three to five years.
If you are worried about losing some of your assets if you file for bankruptcy, talk to a Dallas bankruptcy attorney to determine the best course of action for your unique financial situation.