Many people put off filing for bankruptcy because they believe they will lose everything they have. They’re concerned that their creditors will be able to seize their home, their vehicles, and even their possessions. However, that’s not always the case. There are different types of bankruptcy, and each bankruptcy situation is different. This means it really depends on your debts, your ability or future ability to repay your lenders, and more. Bankruptcy is designed to help people recover from getting into a large amount of debt, not take away everything and leave them to start over. Let’s look at the different types of bankruptcy and what you may lose.
Chapter 7
If you file under Chapter 7, you may find that some of your assets will be liquidated. If you own vehicles or property that is free and clear of debt—you’ve paid off the loans or purchased these assets with cash—then it’s possible that they may be sold and the money used to pay down or off your loans. However, there are some assets that are exempt from this, even if you own them free and clear. In New York, any tools you require for your job are exempt up to $3,000. If the value of your equipment exceeds that, it may be sold, but you will receive $3,000 to buy replacement items.
Other exemptions include real estate up to a specific amount (this varies from county to county), some personal property, a small amount of savings, pensions, wages, and vehicles. Like equipment, many of these items do have a specific value amount that you cannot exceed; otherwise, the asset is sold and you will be given some of the money.
Chapter 13
In Chapter 13 bankruptcy, you can keep many of your assets because this type of bankruptcy is designed to restructure your debt. You will make monthly payments, and if those payments are enough, you won’t be required to sell anything. If they are not, you may have to sell off some assets. Much of this depends on your unique situation, your income, what you own, and how much debt you have.
Here at Michael F. Kanzer & Associates, we can help you determine the best type of bankruptcy for you and help you keep as many of your assets as possible. Contact us today for more information and to discuss your case.