As with most things, being prepared can pay off. Bankruptcy is a big move for most people. You can help your bankruptcy case go smoother if you follow the below tips for things to do before you file.
Understand Exemptions
Even though chapter 7 is known as the liquidation form of bankruptcy, not all filers end up losing property. The key to keeping property is using exemptions. Exemptions allow filers to reduce the value of items, or they may exempt an item entirely, but they are different in every state. For example, a homestead exemption may allow the filer to keep their primary residence. In another state, the homestead exemption may allow the filer to reduce several thousand dollars from the price of the home.
Exemptions can be used for homes, vehicles, personal property, and more. However, the rules in some states could have you reconsidering when to file bankruptcy. In certain states, minimum ownership rules exist. If you have not owned the property in question for the required time, you might need to put off filing for a few months or more. Speak to a bankruptcy lawyer to find out more.
Choose State or Federal
If you have recently moved, you may be able to use the exemptions of your previous state. Not only do exemptions vary a lot from state to state, but you may also have the option to choose between either state or federal exemptions in some states. Look at the exemption choices and speak to a bankruptcy lawyer so that you can make the most of any exemptions available.
Check Your Assets
You can do some pre-bankruptcy rearranging of assets in some cases. The bankruptcy court can seize personal property not protected by exemptions. However, you can often use non-exempt assets to purchase something that will be exempt. For instance, if your state allows you to keep a personal vehicle, you can take cash from a savings account, which would normally be non-exempt, and purchase that vehicle. The vehicle would be safe from seizure, but the cash would not be. Be sure to talk over things with your lawyer before you make any moves, however.
On a related note, be careful selling or giving away property before you file. The bankruptcy trustee can look back through your financial transactions and undo any that removed assets from your ownership. You can avoid this, however, by waiting a bit longer to file your bankruptcy.
To learn more, contact a chapter 7 bankruptcy attorney.
Share
