When you file for Chapter 7 bankruptcy everything you own becomes part of the bankruptcy estate. The only property not included in the estate is exempt property, which varies from case to case, but usually includes things the court allows you to keep to make a fresh start.
The assets in the estate that are not exempt are liquidated, which means they are sold and the proceeds are used to pay back the debts you owe. In some cases, assets in the estate are not sold because their value is less than the effort it would take to sell them or it costs a great deal to maintain them and the trustee cannot sell the item soon enough to make a profit. And there are also instances in which something has a great deal of value to the debtor, but selling it will get little, if any profit.
What happens to all of these items that are not exempted, but not worth the time and effort of the trustee to sell?
The trustee abandons the items. He or she files notice with the bankruptcy court about the intention to abandon the property and then the property reverts back to the debtor. This means the property is once again yours to keep.
It also means that if something is particularly valuable to you, but has limited or unusual financial value, and you have postponed filing for bankruptcy because you were afraid to lose the item, you can move forward with your bankruptcy without fear. Just make sure you let your bankruptcy attorney know about the item and explain the situation. Failing to include the item when you file can get you into a lot of trouble. Not only could your bankruptcy request be denied, you could face perjury charges for reporting your information incorrectly.
Working with an Experienced Bankruptcy Attorney
Filing for bankruptcy can be a scary experience, especially when you think you are going to lose everything. Chances are bankruptcy will disrupt your current situation and depending on the type of bankruptcy for which you qualify, you will lose the majority of your assets.
This is why it is so important to work with an experienced bankruptcy attorney. He or she will explain your option and can provide you with information to help you make the best decision. Sometimes bankruptcy restructures your debt and does not require you to give up valuable belongings, including your home or vehicle.
For many, the loss of certain assets and temporary financial freedom is worth it to get their life back on track. The short-term burden is worth the long-term results.
If you would like to know more about bankruptcy or you are concerned about filing for bankruptcy because of the property you stand to lose, we can help. Contact the Law Offices of Robert M. Geller at 813.254.5696 to discuss your situation and to learn how bankruptcy can help you.