Thinking Past Tomorrow: Will Bankruptcy Throw Away Your Assets?August 31, 2016 / byArs Lexis / Categories : Economist's View
Bankruptcy remains to be a viable alternative solution to debt problems for individuals and businesses alike. One of your concerns with bankruptcy may be about the state of your assets once you file for a claim.
The lawyers with Utah Bankruptcy Pros suggest that before enduring the bankruptcy process, you ought to know what you’re getting into. After all, securing your assets during bankruptcy is possible, but the two most common chapters have different approaches toward asset retention.
Can You Keep Your Assets with Chapter 7 Bankruptcy?
Chapter 7 bankruptcy is the most common bankruptcy claim for civilians or individuals. To file for this claim, however, you must pass a means test that will determine your eligibility. Only individuals or businesses with income and expenses that fall under a specific line can file for Chapter 7.
“Liquidating bankruptcy” is another term for it. If you qualify for this chapter under the Bankruptcy Code, you may be relieved of your outstanding debts through the sale of your non-exempt assets, thereby liquidating them. While you may retain some of your assets, the primary point of Chapter 7 Bankruptcy is to give you the option to liquidate assets in order to pay off your debts.
If you are not qualified for this particular chapter and still choose to file for bankruptcy, Chapter 13 may be a more applicable option.
Can You Keep Your Assets with Chapter 13 Bankruptcy?
One of the main differences between the two chapters is that Chapter 13 in the Bankruptcy Code is only for individuals. This chapter is also known as the “wage earner’s plan” as it gives you the option to pay off your debts in a way that does not impede your lifestyle.
The filing of this claim also allows you to keep your assets and it prevents foreclosure, provided you abide by the court mandated payment plan. The plan takes your pattern of expenses and current income into consideration, so you can pay off your debt in a comfortable pace within three to five years.
There is a stigma attached to the idea of bankruptcy when it’s not that bad at all. In contrast to popular belief, you don’t lose everything you own when you file for bankruptcy—it actually gives you the chance to free yourself from debt and fix your credit history.