by Lisa Wilcox
9/14/2010 11:34:00 AM
When considering filing bankruptcy, the first question a client usually asks is what property and belongings he or she will be allowed to keep.
However, the answer to your question depends to some extent on what property you own and what your personal circumstances are. The debtor may own some property that qualifies as exempt from bankruptcy, and the debtor gets to keep it. Other property is nonexempt, which means the debtor may lose it in the bankruptcy.
Ideally, bankruptcy is designed to give debtors a fresh start. To this end, the property a debtor gets to keep is designed to aid him in providing financially for himself and his family, if any. Under most circumstances the exemption amounts are enough to allow debtors to keep their home, car, household furnishings, life insurance plans, qualified retirement accounts and other similar property.
However, when you file for bankruptcy, the bankruptcy court appoints a trustee. The trustee appointed to the case may sell all nonexempt property, to pay the debts of the debtor. In some cases, the trustee will sell the property to a third party. On the other hand, under some circumstances, the debtor may be able to buy the property back from the trustee, by obtaining money from a third party or by paying for it over time. Once the trustee sells all nonexempt property the trustee distributes the proceeds from the sale to the debtor’s creditors.
A person contemplating bankruptcy is well served to hire an attorney to assist him. Attorneys may help a debtor to ensure he takes full advantage of all lawful property exemptions pursuant to state and federal law. This is because if the debtor fails to claim an available exemption on the property when the bankruptcy is filed, the exemption may be lost. Without a complete analysis in that regard, the debtor may not realize the full benefits a bankruptcy is designed to offer. As with any other legal proceeding, it is important in bankruptcy for a debtor to know his rights.