Minnesota Bankruptcy Attorneys Fighting For You
Although bankruptcy has been around for awhile, it still has this misconception by those who have never filed that the courts will take basically everything you love to pay down your debts. That is not true at all. In fact, you will find that you can retain actually quite a lot when filing Chapter 7 bankruptcy.
What happens when you file Chapter 7 bankruptcy is that the court will discharge most of your debt so you no longer have to pay it. The trade-off for not having a repayment plan like in Chapter 13 bankruptcy is that the court will take some assets, sell them, and use that to pay your debt. However, instead of just taking everything, there are many items that are exempt completely or exempt up to a certain value.
What Assets Do You Keep When Filing Chapter 7 Bankruptcy?
When you file for Chapter 7 bankruptcy, there are certain items that cannot be collected in order to be sold off and there are certain items you can expect to lose.
Exempt Assets
- Cars up to a certain value
- Clothing
- Furnishings
- Appliances
- Jewelry up to a certain value
- Tools of your trade
- Public benefits
- Personal injury awards
- Your home up to a certain value – $470,000 in 2020
- Retirement accounts up to an almost unlimited amount
- Some money in your checking account
Non-Exempt Assets
- Stock, bonds, and other investments, UNLESS THEY ARE IN A RETIREMENT ACCOUNT
- A good bankruptcy attorney can usually show you how to put these into a retirement account.
- Real estate aside from your family home
- Luxury vehicles
- Collections (stamps, coins, ect)
- Luxury items (grand pianos, ballroom gowns, ect)
- Family Heirlooms of value
What About Exemptions Up to a Certain Value?
If you are considering filing for bankruptcy and passed the means test in order to qualify for Chapter 7 bankruptcy, you may be afraid that you will lose things like your house or your car that you need. If you are living in a wildly expensive home with a high mortgage or have an expensive car, this may be true, but it may also be for the best.
What happens after Chapter 7 bankruptcy is you will still have to pay a mortgage or a car payment. That debt will still exist because it is a secured debt. However, if you own a car or a home that is above a certain exemption value, the following will happen:
- The property is sold by a court representative
- The amount left on the mortgage/loan is paid from the sale amount
- You are given the amount of the exemption
- The rest of the sale pays unsecured debts like credit cards, medical bills, ect
Even though you lost your home or your car, you are still given the exemption amount to be used to get a more modest replacement that you can actually afford to pay on. While it may be stressful to lose this property, overall, since the secured debts cannot be discharged by bankruptcy, it is for the best for your new financial start.
Contact Walker & Walker For A Free Consultation
What scares people the most about bankruptcy is that they think the courts will leave you with nothing so you have to start over again. However, that is just not true. If you qualify for Chapter 7 bankruptcy, it means you can’t form a repayment plan. By discharging that debt, they won’t maliciously take your home of your children’s toys to pay off creditors. They will just take what you don’t need. You need to believe that the system is on your side in these cases.
If you have debt that has gone out of control and are ready to make the leap into filing bankruptcy, contact us today. The Law Office of Walker & Walker is dedicated to walking people through the process to help you get your life back under control again.
Over 95% of our clients find that they get to keep everything they own when they file bankruptcy.
