Will I Lose All My Assets When I File for Bankruptcy?

 Posted on July 05, 2023 in Uncategorized

While bankruptcy can help individuals and families eliminate some or all of their debts, many people who consider filing for bankruptcy are concerned about losing their assets, such as their home, car, or personal belongings. While it is true that bankruptcy will sometimes involve a liquidation of assets, the extent to which you may lose your assets will depend on several factors, including the type of bankruptcy you file and the exemptions available to you.

Chapter 7 Bankruptcy: Liquidation

Chapter 7 bankruptcy, also known as liquidation bankruptcy, is the most common form of personal bankruptcy. In a Chapter 7 bankruptcy, the types of assets you own will be evaluated, and your non-exempt assets may be seized and sold to repay your creditors. However, North Carolina bankruptcy laws provide exemptions that protect certain types and amounts of property from being liquidated.

While the exemptions vary depending on your individual circumstances, some common exempt assets in North Carolina include:

• Your primary residence (up to a certain equity limit, which is $35,000 in most cases)

• Your vehicle (up to a value of $3,500)

• Necessary clothing, household goods, and furnishings (up to a value of $5,000)

• Retirement accounts and pensions

• Public benefits, such as Social Security and unemployment benefits

• Tools of trade or profession (up to a value of $2,000)

If your assets fall within the exemption limits, you can keep them during a Chapter 7 bankruptcy. However, any non-exempt assets may be sold to repay your creditors.

Chapter 13 Bankruptcy: Repayment Plan

If you do not qualify for Chapter 7 bankruptcy or have non-exempt assets that you want to keep, Chapter 13 bankruptcy may be an option for you. This type of bankruptcy involves creating a repayment plan in which you will make affordable monthly payments to the bankruptcy trustee over a three to five-year period. The trustee will distribute these payments to your creditors.

Unlike Chapter 7 bankruptcy, Chapter 13 bankruptcy will not require the liquidation of your assets. Instead, your repayment plan will be based on your income and your regular living expenses. Any disposable income that is left over after paying expenses such as rent or mortgage payments, utilities, groceries, transportation costs, and insurance will be put toward your repayment plan. The court will review and approve your repayment plan, and you will begin making monthly payments. After the plan has been completed, any remaining unsecured debts that were included in the plan will be discharged.

In addition to paying off some of what you owe toward debts such as credit cards, Chapter 13 bankruptcy allows you to catch up on mortgage payments or other loans that are past-due and avoid foreclosure or repossession. It can be a good option for reworking your budget and ensuring that your family will be able to meet your ongoing needs while providing a path to financial stability in the future.

Consult With a Mecklenburg County Bankruptcy Attorney

When considering bankruptcy, it is essential to consult with an experienced attorney who can evaluate your unique financial situation and help you understand your options. At Blossom Law PLLC, our Huntersville bankruptcy lawyer can guide you through the bankruptcy process, advise you on how to protect your assets to the fullest extent possible, and ensure that you comply with all legal requirements to discharge your debts.

If you are concerned about the potential loss of your assets when filing for bankruptcy in Mecklenburg County, North Carolina, contact us at 704-256-7766 to schedule a free consultation. We will review your case, explain the exemptions applicable in your situation, and provide guidance tailored to your specific needs.