Bankruptcy: How Do You Keep Your Stuff?
Many of us know or have heard of people who filed for bankruptcy. Yet, we don’t often hear of people who have lost their assets in bankruptcy. Many stories of the moving truck backing into people’s houses to haul away their belongings after they file for bankruptcy turns out to be completely false. But why?
The answer is that bankruptcy laws allow people to keep a lot of their property, including the property that most of us use or need on an everyday basis. There are a few ways that the bankruptcy code does this.
Keeping your debt (and your stuff)
Of course, the point of bankruptcy, especially Chapter 7 bankruptcy, is to get rid of your debt. But in some cases, you may want to keep your debt, because keeping that debt lets you keep certain property. For example, if the debt secures your house or car, you may want to keep the house or the car, and thus, you may want to keep paying the debt so you can keep the property.
When you file for bankruptcy, you do have the option of reaffirming the debt. The court has to approve, but so long as it is in your best interest to keep the debt, you have the financial means to repay the debt, and the creditor gives you something in return for keeping the debt (such as waiving interest, or some alteration of the payment terms in your favor), the court will approve of your desire to keep the debt.
You will have 60 days after you agree to keep the debt to change your mind and opt not to keep the debt.
Exemptions give you a “cup” of value. Whatever property you can fit into that cup you get to keep.
For example, let’s assume that you get to keep $4,000 in personal property. You could keep one car with a value of $4,000, or 4 TVs worth $1,000 each or 40 shirts, each worth $100.
The good thing about exemptions is that the value of your property is based on what it’s worth now—not on what you paid for it. So even if you paid $1,000 for those 4 TVs, by now, those TVs may only have a market value of $200 each. In fact, most people who file for bankruptcy find that there are so many exemptions, and that their property is worth so much less than they thought, they end up being able to keep most of their property.
Exemptions “stack” on each other. So, if you get a $1,000 exemption for a car, you don’t have to use your personal property exemption for your car—you can use the entirety of your personal property exemption for your other items.
Whatever kind of bankruptcy you may need, get your questions answered correctly from the very start. Call the West Palm Beach bankruptcy lawyers at Kelley, Fulton & Kaplan at 561-264-6850 to discuss your bankruptcy.