Assets That Are Exempt In Personal Bankruptcy
What is a Personal Bankruptcy?
Bankruptcy is a legal process in the United States that allows individuals and businesses to get debt relief. A company or person may declare bankruptcy if they are unable to pay their debts. Personal bankruptcy is one of many different types of bankruptcy.
People who are deeply in debt often consider bankruptcy as the best solution. Yet, in many cases, there are better alternatives to bankruptcy. So before submitting a bankruptcy application, consider the pros and cons of your decision.
There are a few things to consider if you’re thinking about declaring bankruptcy.
- Bankruptcy is a serious decision that can have long-term consequences.
- Personal bankruptcy is only an option if you meet the legal requirements.
- Bankruptcy is a legal process that must be carefully planned and executed.
- Bankruptcy is an expensive and time-consuming process.
- Keep in mind that personal bankruptcy is not your only option.
If you decide to file for bankruptcy, consult with a lawyer first to ensure you understand the process and all possible outcomes.
Changes in the Bankruptcy Law
The government has imposed changes on the bankruptcy procedures to ensure that only those eligible can be discharged from debts. In the past, anyone could apply for bankruptcy without prerequisites. Today, completing a credit counseling course is a requirement before filing.
The credit counseling agency accredited by the government will recommend whether or not bankruptcy is an option. If alternative solutions are available, the credit counselor will advise the borrower on how to manage their debt repayment and finances.
Personal Bankruptcy Filing Procedures
If you are qualified to file for bankruptcy, what should you do? Does it mean you need to give up all your assets?
Are there any properties that are exempt from repossession? The government has made provisions for people who are deeply in debt.
Before taking any step, it is best to hire the assistance of a bankruptcy attorney.
Preparing your bankruptcy application can be a complicated process. You will be required to provide details about your investments, savings accounts, insurance, and assets.
If you’re not familiar with the terminologies of bankruptcy, providing the wrong information in your application can result in delays or even rejection.
Assets That Are Exempt In Personal Bankruptcy
- Pensions and IRAs are exempt from bankruptcy.
- College funds or educational funds for your children are also protected. Usually, if the borrower owes more than 80% outstanding balance on the mortgage, the borrower will be allowed to keep the home.
- You may also keep any vehicles or bank savings worth less than “$2,000” in total.
- Disability Payments are exempt from seizure.
- Life insurance policies are also exempt from seizure in bankruptcy.
The Income Means Test
The income means test determines which type of bankruptcy is eligible for the applicant.
Chapter 7 bankruptcy discharges the borrower from all debts or repayment obligations, while Chapter 13 puts the borrower under a mandatory repayment plan which can last for five years. It means that a portion of the borrower’s monthly salary will be deducted automatically as debt repayment.
Personal bankruptcy should be a last resort. It is a long process, but it can provide relief from overwhelming debt. Before making a decision, it is essential to understand the implications of filing for bankruptcy. There are many resources available to help you along the way, so don’t be afraid to ask for help. If you are considering filing for personal bankruptcy, please seek legal counsel.
About the Author:
The team at Maverick Consulting Group have been helping business owners and consumers with credit problems to obtaining financing for over 24 years. This site was created to help anyone who wants to learn about how to improve their credit. Copyright © 2010
