What Can Be Taken When You File for Bankruptcy?
What Can Be Taken When You File for Bankruptcy?
Filing for bankruptcy is often a stressful and complex decision but understanding what happens to your assets can help ease some of the uncertainty. One common concern is whether you’ll lose your property, such as your car, home, or personal belongings when filing for bankruptcy. J. Bottom & Associates Ltd. advises British Columbia customers about what can be taken when they file for bankruptcy. Contact us to learn more.
What Does It Mean to File for Bankruptcy?
Bankruptcy provides a legal reset for individuals and businesses struggling with overwhelming debt. While it may require sacrifices, such as liquidating some assets, it’s also designed to protect essential property and offer a pathway to financial recovery. Filing for bankruptcy doesn’t mean you’ll lose everything. By understanding your options and working with an experienced attorney, you can protect vital assets while taking steps toward a fresh start. If keeping specific items like your car is a priority, the right planning can ensure minimal disruption to your life.
Types of Bankruptcy and How They Impact Your Assets
The type of bankruptcy you file directly impacts your assets. Before pursuing bankruptcy, we can help you better understand debt consolidation or a consumer proposal for a lesser impact on your credit. The two main types of personal bankruptcy include:
Chapter 7 Bankruptcy – Under Chapter 7, a court-appointed trustee may sell your non-exempt assets to pay off your creditors. Non-exempt property, like luxury items, secondary residences, expensive cars, and high-value collectables, can be taken from you. You can keep personal property, which often includes essential household items, clothing, tools needed for work, and sometimes primary homes, vehicles, and retirement accounts.- Chapter 13 Bankruptcy – Chapter 13 focuses on reorganizing your debt into a 3- to 5-year repayment plan rather than selling off your property. You generally keep your assets, including your home and car, as long as payments are made according to the court-approved plan. You may still need to pay creditors the value of any “non-exempt” property, but this happens as part of the repayment plan instead of liquidation.
What Can Be Taken When You File for Bankruptcy?
J. Bottom & Associates Ltd. can help you better understand what can be taken when you file for bankruptcy. Some of the most common assets and how they are handled include:
- Your Car – The best way how to file for bankruptcy and keep your car is to file for Chapter 13 bankruptcy because it typically allows you to keep your car if you continue making payments through your repayment plan. Chapter 7 bankruptcy generally lets the trustee sell the car if its value exceeds the allowable exemption limit. If your car is considered essential for work or transportation and is under exemption limits, you’ll likely keep it.
- Your Home – Exemption amounts vary by state, but any equity you hold in your home below this limit will usually fall under a “homestead exemption”. For Chapter 13, the repayment plan allows you to keep your home if you make the required payments for any mortgage arrears.
- Retirement Savings – Most qualified retirement accounts, like 401(k)s and IRAs, are protected and cannot be taken to satisfy creditors during bankruptcy.
- Luxury or Nonessential Items – Non-exempt high-value items, such as expensive jewellery, second homes, designer goods, or collectables, could be taken and sold under Chapter 7. However, these are not typically at risk under Chapter 13.
- Money in Bank Accounts – Funds in bank accounts may be taken if they are not exempt, especially in Chapter 7 cases.
How to File for Bankruptcy and Keep Essential Assets
To protect the assets that matter most, it’s important to plan your bankruptcy filing carefully. The best way to keep essential assets while filing for bankruptcy is to work with our knowledgeable team. We walk with you through the process and help you understand your rights. If you want to keep items like your car or home tied to loans, ensure your payments remain up to date. For individuals looking to protect their car or primary residence, filing Chapter 13 may be more appropriate than Chapter 7 to avoid asset liquidation.
How to File for Bankruptcy
Our experienced team works with you to help you through the bankruptcy filing process. It’s vital to determine whether Chapter 7 or Chapter 13 bankruptcy fits your circumstances. Your income, assets, and debt levels play a significant role in which one you qualify for. Chapter 7 is typically suited for those with little income and few assets, while Chapter 13 works better for individuals with higher incomes who want to keep their property. We can help you complete the official bankruptcy forms and guide you into submitting them to the appropriate bankruptcy court.
Contact J. Bottom & Associates Ltd.
J. Bottom & Associates Ltd. is here for customers in New Westminster, Port Coquitlam, and North Vancouver, BC. Let us help you understand how bankruptcy can affect your assets. We’re always here to answer your questions. Contact us now to schedule a free consultation.