Bankruptcy Assets

This article explains what happens to your assets after bankruptcy and how to protect them.

It can be overwhelming to owe a lot of money to creditors and banks. You may be wondering if you will ever be able to pay off all this debt. There is one option that you should consider only as a last resort. Bankruptcy is decided when the debt is too large to clear in your current situation. Bankruptcy offers a breath of fresh air to those under the stress of debt for so long.

There are two main types of bankruptcy. Chapter 7 bankruptcies forgive almost all of your debts but you will still be expected to pay for government loans such as student loans and tax liens. Chapter 13 bankruptcies do not forgive your debt; rather you are given a repayment plan to pay back a large chunk of your debt in 3-5 years. This happens when you have too many assets to qualify for chapter 7 bankruptcy. After chapter 13 bankruptcy you will still have this on your credit report.

When you file for bankruptcy your assets will sometimes be seized by the bank or court. There is a homestead exemption law that prohibits your home and car from being taken. Other assets you have will be taken and the estimated cash value will be applied to the amount of debt that you owe. For example if you owe $100,000 in debt and you have a jewelry collection appraised to be $25,000 then you will owe $75,000 after the jewelry is seized. If you have antique furniture these will be taken and appraised and the value will be taken out of the debt that you owe.

Filing for bankruptcy should not be a rash decision. You must think carefully how this will affect your future financial goals. It will be difficult to get loans and even employers who do credit checks will be wary of trusting you. The best option is to first try to repay the debt in regular monthly installments, unless the debt amount is far too large to handle. After a bankruptcy it is imperative to learn about financial basics so that this does not happen again. Think how much harder it would be after two bankruptcies, let alone just one. The key to preventing bankruptcy involves a small deal of planning and a budget so that you will never be late on your payments. It also depends on taking responsibility for loans and paying back on time .