Chapter 7 Bankruptcy and Your Assets - What Happens When You File?
A Chapter 7 Bankruptcy allows you to exempt (protect) equity in real and personal property, such as your:
- Home (Real Property)
- Personal belongings & misc. household goods and furniture
- General exemptions, such as bank accounts, income tax refunds, qualified retirement accounts, etc.
However you can only protect a certain dollar value for each category. We will assess this for your circumstances at the free consultation. So what happens if you or you or your attorney undervalues your assets (or fail to list assets) when you file your Chapter 7 bankruptcy petition? If you exceed the exemption limit(s), the simple answer is: You lose! Once you have filed for Chapter 7 bankruptcy protection, you cannot voluntarily dismiss or convert your case to Chapter 13 if it is determined that you have assets that exceed the exemption levels. The Chapter 7 Trustee would move to liquidate non-protected assets to distribute money to your creditors. So what can you do to avoid this? 1.) Hire a Reputable and Experienced Bankruptcy Law FirmSince the bankruptcy laws changed in 2005, we have seen a trend of:
- Inexperienced attorneys trying to file bankruptcies for their clients with little to no practical experience.
- Certain attorneys or firms advertise low fees that cannot support the work or staff necessary to ensure the best outcomes for their clients.
Since the law change in 2005, it is much more complex to file for Chapter 7. There are additional criteria to qualify (Means Test), added documents that the Trustee requires for review, and increased scrutiny from the Chapter 7 Trustee regarding recorded assets and exemptions. Hiring an attorney who can properly draft and administer your case will save you aggravation through the process and save you from potential loss of assets if the case is not properly filed or managed. Acclaim Legal Services strives to strike the perfect balance of maintaining the proper professional staff while keeping our attorney fees at or below the local average. Call us at 866-261-8282 for a free evaluation and price quote. 2.) Disclose all Your Assets to Your Attorney and the CourtDo not attempt to hide assets or repayments to certain creditors. Full disclosure of your assets and their worth will ultimately protect you. The Trustee does due diligence to verify your assets and personal property. This includes:
- Secretary of State title search;
- Public records search for real property;
- Property valuation through trusted sources such as Kelly Blue Book, Zillow, etc.
The Trustee will thoroughly review the financial information we provide through the petitions and schedules and are prone to asking questions or requiring further documentation if things are not properly recorded. 3.) If You are on the Asset or Income Threshold of Chapter 7 Allowances, Consider Filing Chapter 13 Reorganization PlanAs previously mentioned, many inexperienced attorneys flooded the market within recent years. Due to general lack of experience, these attorneys may not understand the nuances of the various types of bankruptcies and associated benefits. Hiring an attorney with broad experience in administering both types of personal bankruptcies ensures that you are educated of all of your available options, not just those the attorney is familiar with. There are two main reasons this is important:
- You want to be sure you are taking full advantage of all benefits of filing for bankruptcy. Examples of benefits of filing Chapter 13 that are not available under Chapter 7 protection:
- Removing a second mortgage or home equity loan;
- Reducing a vehicle payment and potentially the principal debt;
- Court protection from foreclosure, vehicle repossession, IRS tax levies, etc.
- A Chapter 13 allows you to protect non-exempt assists that may otherwise be liquidated by a Chapter 7 Trustee. You want to ensure that all of your assets are protected and you are taking full advantage of all available exemptions. An experienced Michigan bankruptcy attorney will know which bankruptcy options will best serve your long term and short terms financial goals.
We proudly offer 50 years of combined legal experience in bankruptcy and debt resolution. Our firm offers free phone or in-office consultations to discuss your finances and develop recommended next steps for finding debt resolution and financial freedom. Call us today at 866-261-8282 or schedule a time online.