Bankruptcy and Possessions
Filing for bankruptcy can improve your financial situation, but it also has a major impact on many aspects of your life. One of the biggest concerns of those considering bankruptcy is how filing will affect their possessions.
Does bankruptcy mean losing all of your possessions or having to sell everything you own to pay your creditors?
The simplest answer is “more than likely, no, you’re personal possessions won’t be affected.” However, there might be some exceptions and it is possible that filing for bankruptcy will result in the loss of some of the things you own.
What should you know about how bankruptcy will affect your possessions before you choose to file?
What Possessions Can I Keep If I File for Bankruptcy?
Unlike the way in which bankruptcy is sometimes portrayed in entertainment, it would be extremely unusual that bankruptcy would result in the loss of your household possessions. Things like clothing, furniture, appliances, and electronics are rarely affected when you file for bankruptcy, and creditors won’t come into your home and carry away your refrigerator or handbags or fishing equipment.
The primary reason household goods are not affected is because their value has depreciated too much for them to be worth any time investment by the bankruptcy trustee. The only time you’re at risk for having your personal possessions taken from you is if their value is enough that it would be worth auctioning them off to pay creditors.
Anything you believe could be at risk might be able to be exempted when you file for bankruptcy. Your bankruptcy attorney will assess your possessions and determine if anything needs to be listed as an exemption. Make sure you are clear about what you own and if you have any concerns before filing.
Should I Give Away Valuable Items to Protect Them?
Some people assume that gifting their valuable items to a friend or family member is a smart way to protect the item from the bankruptcy trustee. Unfortunately, this plan can backfire.
The bankruptcy trustee has the authority to delve into your finances and other aspects of your life, and if he or she determines you tried to hide something from the court, it can still be confiscated. This means the trustee can go to the person to whom you gave the item and demand its return. This creates a situation that is not only embarrassing for everyone involved, but that might also result in the rejection of your bankruptcy case.
You are better off being open and honest with the court about your possessions and listing anything you want to keep as an exemption. Your bankruptcy attorney will help you navigate the complex rules concerning exemptions and ensure that the majority of items you want to be protected aren’t affected when you file for bankruptcy.
For more information about exemptions, check out this information from Nolo.com.
Good News for Anyone Filing for Bankruptcy
The good news for bankruptcy filers is that the laws concerning exemptions are very specific and if you do your part, you will know up front what you can keep and what you’ll need to turn over to the trustee. A good bankruptcy attorney ensures there are no surprises after you file.
If you’d like to know more about how exemptions work or you are ready to get started with the bankruptcy process, contact the Law Office of Robert M. Geller at (813) 254-5696 to schedule a consultation.