It is a difficult decision to file for bankruptcy, as it has the potential to disrupt your life and finances in ways you may not have anticipated. If you decide to file for Chapter 7 Bankruptcy, you must understand what assets you can keep during the process. This article will discuss some things that can be kept when filing for Chapter 7 Bankruptcy, such as exempt and non-exempt property. It will also provide an overview of how a bankruptcy trustee might treat certain debts and assets during the process.

Let’s provide you with a better understanding of chapter 7 bankruptcy and how it would affect your assets.

What is Chapter 7, Bankruptcy?

One of the main purposes of Chapter 7 is to eliminate certain debts to give an honest individual debtor a “fresh start.” A debtor has no liability for discharged debts. In a Chapter 7 case, only individuals are eligible for a discharge; partnerships and corporations can’t get one. It allows individuals or businesses to eliminate or discharge most debt while keeping some assets. When filing for Chapter 7 Bankruptcy, a court-appointed trustee assesses the debtor’s non-exempt property and liquidates it to pay off creditors.

What Can I Keep When Filing for Chapter 7, Bankruptcy?

When filing for Chapter 7, Bankruptcy, there are various exempt assets (protected) from the bankruptcy estate. The trustee can’t take or sell these assets to repay creditors. Generally exempt property includes:

• Your home and car (up to certain limits).

• Your retirement accounts.

• Your household goods, furniture, and appliances (up to certain limits).

• Alimony and child support payments.

• Social Security Benefits.

• Tools of the trade (items used in your job), such as books, tools, and service instruments.

In addition to exempt property, you may keep non-exempt assets you own during bankruptcy, such as cash and other financial accounts. A chapter 7 bankruptcy lawyer in Annapolis, MD, can clearly explain the types of inheritance in your bankruptcy cases.

Am I Eligible for Chapter 7 Relief?

To be eligible for Chapter 7 relief, you must complete a process known as “means testing.” A means test is an approach for deciding if someone qualifies for financial aid to acquire a service or commodity, such as welfare payments. The test requires filers to compare their average income over the past six months to the median income for similarly sized households in their state. If your average income is less than or equal to the median, you may be eligible for Chapter 7 bankruptcy relief. Additionally, if you show that repaying your debts would take longer than five years and exceed the debt you owe, you may also qualify. You must also obtain a pre-filing credit counseling certification from an approved credit counselor. 

What Happens to My Creditors?

When filing for Chapter 7 Bankruptcy, a trustee will assess the debtor’s non-exempt property and liquidate it to pay off creditors. In most cases, creditors receive only a fraction of what is owed. Additionally, some debts may be discharged (wiped away) completely. The debtor must still pay any remaining debts after bankruptcy has been completed.

How Does a Bankruptcy Trustee Treat Certain Debts?

The Chapter 7 process divides debts into priority and general unsecured claims. Priority claims include alimony and child support payments, taxes, and other government debts. These types of debt must be paid before any general unsecured debts because they have a higher priority in the bankruptcy process.

General unsecured claims are not paid in full in a Chapter 7 Bankruptcy case; however, creditors may still be able to collect money from you by attaching liens to your property. To get a clear understanding of this, consult with a Chapter 7 bankruptcy lawyer in South Florida.

By understanding your rights and the effect filing for Chapter 7 Bankruptcy might have on your assets, you can decide whether this is the best option. If you choose to file, it’s essential to get professional help. Call RLC Lawyers and Consultants and let them guide you through filing for Chapter 7 Bankruptcy. With their knowledge and expertise, you are in good hands.