Protecting Assets in a Bankruptcy
When bankruptcy becomes an option for you or your family, it’s normal to worry about your assets. To protect your assets, you have to have some amount of foresight and understanding of bankruptcy laws. Meeting with an attorney can help prepare you for what could happen with your property.
In Chapter 13 bankruptcy, you usually can keep most of your assets. However, when you file for Chapter 7 bankruptcy, you could have your assets seized and sold. For Chapter 7 bankruptcy filers, lawyers can help you protect your assets.
Exemptions From Bankruptcy
Every state has different laws regarding what can be seized during bankruptcy. You will never lose all of your assets when you file for bankruptcy. Generally, there is a dollar amount that you are allowed to keep. You can usually keep your motor vehicle, household goods, social security payments and retirement accounts.
When you have a Chapter 7 trustee, they may try to help you negotiate to buy back some of your property if you lose it.
Protections for Your Property
If you want to protect liquid assets, then you may want to convert them to other assets. For example, consider converting liquid assets into a vehicle, clothes or other necessities. You can also contribute to your retirement accounts, take out life insurance policies or pay your non dischargeable debts.
Many filers also choose to create asset protection trusts. You would choose an independent trustee to control the trust and control any distributions. Trusts would have to be irrevocable and have spendthrift clauses included.
Mistakes To Avoid
Protecting your assets can be complex and so it is always recommended to have a lawyer at your side to ensure that you legally protect your property. Do not transfer your assets after you file for bankruptcy. The Chapter 7 trustee can void any transfers that you make within a year of filing bankruptcy. You should always plan to protect your assets long before you file for bankruptcy. If you transfer your assets right before you file bankruptcy, this may be seen as a fraudulent transfer. Not only could the transfer be voided, but your bankruptcy could be denied.
Asset protection can be complicated. You do not want to come across as being fraudulent or misleading in any way. To protect your property, it may be in your best interest to begin conversations with a chapter 7 bankruptcy lawyer in Arlington, TX from a firm like the Brandy Austin Law Firm, PLLC.