Will You Lose Assets In A Chapter 7 Bankruptcy Case?
When using Chapter 7 bankruptcy, you will experience a tradeoff. This branch provides forgiveness of certain debts, but the tradeoff is that you might lose some of your assets. Will you receive forgiveness of all your debts, and will you lose all your assets? You will probably not receive forgiveness of every debt or lose every asset, but you could lose some. Here are several things to know about your debts and assets in a Chapter 7 case.
The Effects of Chapter 7 on Your Debts
People who use Chapter 7 bankruptcy often turn to this branch of law for relief from credit card debts. Credit card debts are among the most common debt you can receive forgiveness from through Chapter 7. You can also receive forgiveness of medical bills, personal loans, and many other types of debts you may have.
You will not receive forgiveness on every debt you owe, though. For example, do you owe money for child support or alimony? If so, you will have to pay all of it. You will also have to repay student loans, back taxes, and many other debts. Your attorney can help you understand which category your debts fall into before you file.
Things to Know About Your Assets
If you need debt forgiveness for your qualifying debts, you might have to trade off some of your assets for this forgiveness. The court cannot take all of your assets, but they can take some. When you file, your attorney will help you determine which assets qualify and which do not. Lawyers generally classify assets as exempt and non-exempt. The court cannot take exempt assets from you, but they can take any that are non-exempt.
Assets that fall into the non-exempt category include money you have in your bank accounts, stocks, and second homes. They can also take second cars, RVs, and other valuable items. If you own a house, they might be able to take that, too. If you want to keep your home when filing for Chapter 7, you will typically need to make sure you are caught up on the payments. Secondly, you cannot have a lot of equity in the house. If you have too much equity, they can take your house in some cases, even if it is your first home.
If you would like to learn how Chapter 7 will affect you if you file, talk to a local bankruptcy attorney at a law firm like the Havner Law Firm today.