When you have made the decision to file for bankruptcy, working with an attorney can be incredibly helpful. In fact, it could mean the difference between getting a large portion of your debt wiped out or losing certain assets. When you work with an attorney, you are getting an advocate on your side to ensure you have filed the correct paperwork, make sure you understand what you are filing and why you are filing it, and you will get someone who has your best interests at heart. They want you to understand every step of the process. If you are considering filing Chapter 7 or Chapter 13 bankruptcy, speak with a lawyer today. They can help show you which option is best for your unique situation. For more information on these types of bankruptcies, please read the article below.
The Differences Between Chapter 7 and Chapter 13 Bankruptcy
Many people do not realize that there are different types of bankruptcy, however, it is imperative that you file for the right kind so that you can start off with a cleaner slate. For example, in Chapter 7 bankruptcy, you would file with a court to have them discharge many of your debts. This may sound like an easy solution, but the bankruptcy trustee can then go in and take away valuable property that is not exempt from being collected. When they do this, they can sell the property and then distribute the proceeds from the sale to various creditors.
In Chapter 13, on the other hand, you work with the bankruptcy court to file a repayment plan so that you can begin paying back a portion of your debts. This is completely different from Chapter 7 and it can happen when you have the means and income to begin a repayment plan. When you file for Chapter 13 bankruptcy, you do not lose assets since you will be paying back these debts through your income.
Examples of Exemptions for Chapter 7 Bankruptcy
Many people wonder what kind of property and asset exemptions there are when it comes to Chapter 7 bankruptcy. Some of these are:
- Insurance. Typically, a court allows you to keep the actual cash value of your policies.
- Personal Property. Depending on what you have, a court will allow you to keep different types of furniture, household goods, appliance, and clothes. There are stipulations, however. If your clothes are fur coats, they will not allow you to keep those. Further, your vehicle and the jewelry you own can only be valued up to a certain amount.
- Home Equity. As of April 2019, you can exempt up to $25,150 of home equity.
- Retirement Benefits. Speak with your lawyer, but most times your retirement benefits are exempted.
Filing for bankruptcy can be complicated, but it does not have to be. If you have any more questions regarding which type of bankruptcy you should file for or if you have questions about certain exemptions. Please reach out to a law firm now.