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Your Property in Bankruptcy
Snohomish County Bankruptcy Lawyers
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Everett Bankruptcy Attorneys
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What happens to my property in a bankruptcy?
Most people who file bankruptcy can keep their property, though if you are making payments on a car or a house, you will have to keep making payments to keep the property. Some property can be taken and sold to pay your creditors in a bankruptcy. In a Chapter 7 bankruptcy, the process if quicker – the property is taken and liquidated to pay creditors. In a Chapter 13, you can make payments to cover what the creditors would have received in a sale and spread those payments over three to five years.
In truth, however, most of our Everett bankruptcy are able to successfully discharge or completely eliminate 100% of their debts while actually retaining 100% of their assets and personal property. Of course, every case is unique and requires a careful review by an experienced bankruptcy attorney. But the majority of people who qualify for bankruptcy are actually able to keep all of their property when they file. This is what enables them to make a fresh financial start. Without any possessions, it would be impossible to start over.
The only way to truly know if all of your property will be exempt is to speak with an experienced Everett bankruptcy lawyer today. Call now to learn more about how the bankruptcy laws can protect you and your family while enabling you to put your financial difficulties behind you.
An Everett bankruptcy gives you a fresh start.
To give people a meaningful fresh start in bankruptcy, the law allows them to keep certain necessities defined as “exempt”. For example, retirement plans are usually 100% exempt. In Washington, you can protect up to $125,000 of equity in your home. Most fairly modest cars can be protected. In Washington, you can choose between state or federal exemptions and it is important to consult an attorney to determine the right strategy for protecting your property.
Some people might own property they don’t realize they have. For instance, the right to sue someone, even if you don’t want to sue, is considered property. A potential tax refund, even if you haven’t filed a return, is considered property. Problems can arise when you transfer property out of your name just before filing bankruptcy, especially if you transfer it to an “insider” (usually a family member or business partner). Because of these hard to predict issues in bankruptcy, it is important to consult an attorney about how a bankruptcy might affect your overall situation.
How does each type of bankruptcy allow me to keep my property?
In a Chapter 7 bankruptcy, you can keep cars, homes or other property you are making payments on if you continue to make the payments. The creditor will want you to sign a new agreement that takes the debt out of bankruptcy called a “reaffirmation agreement.” You have to be careful when signing this agreement because if you can’t make the payments in the future, you could face foreclosure or repossession and still have a debt after the property is sold at auction.
However, if you do not reaffirm the debt, you may not get statements in the future and cars can be repossessed, even if you are current. Because you can eliminate a lot of debt in a hurry in a Chapter 7, you may find it easier to afford mortgage or car payments.
A Chapter 13 bankruptcy allows you to consolidate installment payments with other debt according to a formula in a three to five year plan. A Chapter 13 plan lets you get caught up on mortgage payments over time. You can reduce your car payments and, if you bought your car over two and a half years ago, you pay back the loan based on the value of the car, not the full amount you owe.
Our Everett bankruptcy attorneys have years of experience helping people start over financially by keeping the most property the law will allow. Most of our Everett bankruptcy clients have nothing to worry about. But if you do have significant assets and cannot pay your debts, we can help you determine what can and what might not be able to be protected. We can also assist you with some pre-bankruptcy planning.