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What Happens to your Property in Chapter 7 Bankruptcy?
It is often believed that when you file for bankruptcy your property is sold to pay off your creditors. This is simply not the case. Although, there are instances where you can lose your property if you have a significant amount of equity in the property, you can protect a lot of your property when you file for bankruptcy in Oakland with the use of bankruptcy exemptions.
With exemptions you can protect up to a certain dollar amount for a piece of property. If your property is worth a lot more than what the exemptions protect you may want to consider a chapter 13 bankruptcy and pay some of your debts back through a three to five year plan. This allows you to keep your property while, in most cases, discharging the majority of your debt. It is best to consult a local bankruptcy attorney to find out how exemptions may help you.
The Chapter 7 Bankruptcy Estate
When you file for bankruptcy your property becomes part of what is called the “bankruptcy estate” and is technically owned by the chapter 7 trustee. If you sold property within the previous two years for a significantly reduced price, that too may become property of the bankruptcy estate. Certain types of property you receive within a six month period after your bankruptcy discharge can become part of the estate. Marital community property will become part of the bankruptcy estate, even if only one spouse is filing.
The Chapter 7 Bankruptcy Trustee
Part of the bankruptcy trustee’s job is to look for any property owned by the individual they can sell in order to pay the debtor’s creditors. For this reason, property with no equity is not of interest to the Trustee. For example, if you owe more on your car loan than your car is worth, the Trustee will have no interest in taking your car. If you do have equity in a piece of property then you can protect a certain amount with the use of exemptions.
If you Have Nonexempt Equity
It is very important to tell your attorney about all of your assets, so they can give you accurate advice about your options. The results of not being completely honest with your attorney can be dire. If you own a piece of property with nonexempt equity the trustee can sell the property at auction and pay your creditors from the proceeds.
Often times, before the trustee sells your property they may give you an opportunity to buy back the property at an agreed upon amount. For example, let’s say you own a car worth $9,000 dollars paid off in full and only $3,000 of that is exempt. You would have $6,000 in nonexempt equity. Selling the property takes time and money, therefore the trustee may allow you to buy back the property for the amount they would have otherwise earned from selling it at an auction. Perhaps even less, if it is in the best interests of the estate.
If you Have More Questions About your Property in Chapter 7 Bankruptcy
If you are considering bankruptcy it is imperative you chose an attorney who is experienced in exemption planning. A mistake in this process of filing bankruptcy can easily cost you thousands of dollars. For more information about the bankruptcy process or protecting your property in bankruptcy contact our Hayward or Oakland offices today at 510-255-4646.
The Law Offices of Melanie Tavare is a debt relief agency. We help people file for bankruptcy under the bankruptcy code.
"Melanie is the best she very responsive and helpful throughout the process everything was taken care of smoothly. If you are thinking of going through bankruptcy she is the best attorney for you. I will forever be grateful having the chance to work with her. She is very honest too."
"I can't thank Melanie enough for helping me through a challenging process and doing so with incredible knowledge, professionalism and tenacity! She went to great lengths to keep me informed, she responded quickly to my questions, and communicated in terms that I could understand. I highly recommend getting in touch with Melanie should you have the need."
"Choosing to work with Atty. Melanie has been one of the best decisions I've ever made. She was a very patient professional to work with and attentive while providing valuable solutions to all of my concerns. If you are searching for of an Attorney who is knowledgeable, transparent, and diligent - well that's Atty. Melanie."
"What I liked about working with Melanie was how prompt and easy to work with she was. She made the process clear and understandable with as little stress as possible. I would work with her again and recommend her to others."
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