Protecting Assets in Chapter 7 – Tips and Tricks

Filing for bankruptcy can be an arduous and emotional process, and it can be even more challenging to navigate if you’re not well-versed in the legalities of it all. One of the most prevalent fears that accompany bankruptcy filings is the possibility of losing all of one’s assets. However, the truth is that there are many ways to protect your assets before and during bankruptcy, and throughout this blog post, we’ll explore some of the tips and tricks you need to know.

Understand The Filing Process: The first and most crucial step is to understand how Chapter 7 bankruptcy filings work. Chapter 7 is the most common form of bankruptcy filed by individuals, and it’s essential to note that not all filings will result in the complete loss of assets. In most cases, filing for Chapter 7 means that a bankruptcy trustee will be assigned to administer the process. They will liquidate some of your non-exempt assets to pay off creditors, but as the debtor, you can keep your exempted assets.
Exemptions In Bankruptcy: Bankruptcy exemptions protect property from being sold during debt liquidation. According to federal bankruptcy law, many assets are exempt. However, the specific exemptions are determined by state laws. For example, states like Florida, Texas, and Arizona, among others, offer generous exemptions for homes, cars, clothing, and household goods. To be clear, many filers can keep their assets and discharge their debts, thanks to various exemptions established by state and federal bankruptcy laws.

Asset Protection Tools: There are a few asset protection tools at your disposal. One such tool is a “homestead” exemption that can protect all, or most, of the equity in your primary residence. Additionally, the use of retirement accounts often falls under the blanket of asset protection. Every state has its own bankruptcy code, which outlines various methods of asset protection available to filers. Consulting with an attorney, who is familiar with the bankruptcy laws of your state, can be extremely helpful in creating a complete list of asset protection tools at your disposal.

Pre-bankruptcy Transfers: While transferring assets before filing for bankruptcy is strictly prohibited, there are certain exemptions when it comes to a few assets. In most states, IRA’s and other types of retirement accounts are entirely safe from bankruptcy proceedings. In addition, it’s a good idea to take note of how long before filing bankruptcy a transfer must occur to avoid fraudulent transfer issues. Remember, it’s critical to make your transfers before filing since the bankruptcy trustee has a broad range of powers at their disposal to go after assets that have been recently sold.

Hire a Houston Bankruptcy Attorney: If you’re filing for bankruptcy and looking to protect your assets, you need the expertise of a lawyer who specializes in bankruptcy laws. During bankruptcy, the rules can be complicated, and hiring a professional can go a long way in helping you navigate the process and protect your assets. An experienced Houston bankruptcy attorney helps in not only ensuring that you correctly follow all the rules but also shows you the available asset protection tools and strategies that are specific to your jurisdiction.

In conclusion, protecting your assets during Chapter 7 bankruptcy filings in the United States is possible. It is vital to remember that bankruptcy laws vary from state to state and that it is essential to know the laws of your state before filing. Engaging with an experienced bankruptcy lawyer who’s knowledgeable about the specific laws of your region is a great way to review all the options available to you. Remember to not only understand the filing process, but also take advantage of specific exemptions, stay up to date on all transfers, and most importantly, hire an experienced attorney. With these tips and tricks, you can navigate bankruptcy and come out the other side with your assets intact.