Bankruptcy Protection and Your AssetsIn most cases, bankruptcy will provide protection for your assets. A Chapter 7 bankruptcy filing, also known as a “straight bankruptcy,” will protect assets that are considered exempt, which means the majority of people filing a Chapter 7 will be able to hold on to what they own. If there are assets that have a higher value than what is exempt by law, an “adjustment of debts” under Chapter 13 bankruptcy can help a person keep what is non-exempt. If someone has assets that are not considered exempt, an experienced bankruptcy attorney can develop a plan to protect the assets when the case is officially filed.
Bankruptcy Can’t Bring Back What Has Already Been Lost
While bankruptcy does provide some protections, it cannot bring back what has already been lost. Assets that have been spent, sold or borrowed against to avoid financial disaster could have been saved if the bankruptcy had been filed sooner. The result of this is a person who will not have anything left with which to start life over.Many people facing bankruptcy do not understand the consequences of borrowing, selling and spending and are unaware of which assets are protected under law. They also do not know how to place themselves in the optimal position prior to filing the case.
Consequences of Filing Without a Bankruptcy Attorney
There are serious and long-lasting consequences to bankruptcy, which is why the decision to file should not be made without an attorney. An example would be a middle-aged woman taking money out of her retirement savings in order to pay debts that would be written off by a bankruptcy. Doing this is harmful to her financial future as a retired person, as she would have nothing to fall back on. Another scenario is a married couple selling a reliable vehicle that has been paid off, in order to resolve bills. They are operating on the assumption the vehicle would be taken from them in a bankruptcy filing, and they would be left with an older model that cannot be relied on to transport them to their jobs. This is the opposite of the fresh start they are seeking. The couple would have been able to keep their vehicle by filing either a Chapter 7 or a Chapter 13 bankruptcy, after consulting an attorney for a strategic plan to protect assets.Many times, people seek legal advice only after they have gotten into financial trouble, as a result of acting on unwise decisions. Painful outcomes can be avoided by planning ahead of a bankruptcy filing by taking the time to get legal advice and create a plan for the filing. The main objective of bankruptcy is a fresh start, in order to build a better life on a stronger foundation. By taking the time to be advised of rights and protections, most assets can be protected from creditors.