One of the major concerns people have when filing for bankruptcy is whether or not they will lose their assets. Florida bankruptcy law helps you protect your assets, but understanding how those laws apply to your situation can be confusing. Working with an experienced bankruptcy attorney helps you take advantage of the “secret” bankruptcy laws that make protecting your assets possible.
What are Exemptions?
Exemptions are a major part of the bankruptcy process. Exemptions define the assets that are eligible protection when you file for bankruptcy. This means the bankruptcy court is restricted from liquidating these assets to pay your creditors.
Unfortunately, figuring exemption planning and application is complicated. It’s not as simple as deciding what you’d like to keep and making it an asset. There are limits and restrictions imposed by the court. Anything not within those limits and restrictions is at risk, even if you think you’ve done what you can to protect it. An attorney can review your situation and help you make the most of the bankruptcy exemptions available under Florida bankruptcy law.
Tools Bankruptcy Attorneys Use to Protect Assets
In addition to the basic laws governing assets, there are tools available that can help you further protect your assets when you file.
Transaction costs are an example of this. When you file for Chapter 7, the bankruptcy trustee can sell non-exempted or partially non-exempted assets only when the sale results in money to distribute to creditors.
Keep in mind, the process of selling assets to liquidate them isn’t free. The trustee must pay an auctioneer or realtor to sell the asset. There might also be taxes associated with the cost of the sale. If these expenses are more than the value of the assets, it’s not worth it to sell.
For example, let’s say you own an asset worth $1000. To sell that asset would require paying an auctioneer $600. There’s an additional $200 owed in taxes. Trustee payments come from a portion of the asset they sell. When all is said and one, the asset is barely worth anything. It’s not worth the effort of selling it.
This is why it’s so important to consider transaction cost when determining the value of an asset and whether or not to include it in your exemptions. Why protect an asset that the bankruptcy trustee won’t bother to liquidate?
This rule applies to higher value assets like houses, too. Once you subtract the expense of selling a home and the costs associated with any liens or loans, a seemingly high-value asset isn’t worth the time it takes to sell it. Under Florida bankruptcy law, trustees must prove to the court that selling an asset results in a “meaningful distribution” for creditors. Without that, the trustee won’t both selling the asset.
Other Tools for Protecting Assets
If transaction costs don’t help your situation, there are other tools available to use to help you protect assets. Some people sell non-exemptible assets and put the money they earn into an asset that does qualify for an exemption. Others move their money into investment accounts that provide protection from the bankruptcy court.
Every situation is different and it’s important to remember that moving money around and trying to “trick” the court can result in dismissal of your case. This is one of the reasons why it’s so important to work with an experienced bankruptcy professional who understand what you can and cannot do.
Experienced Law Firm Helps You Understand Florida Bankruptcy Law
Understanding Florida bankruptcy law is overwhelming. Exemption planning is one of the most challenging assets of bankruptcy. If you have questions about making the most of the opportunities available to you under current bankruptcy laws or you have questions about protecting your assets when you file, we can help. Contact the Law Office of Robert M. Geller at 813-254-5696 to schedule a free consultation.