In a chapter seven bankruptcy, there is a high probability that you will lose property. In this type of bankruptcy, assets that you own will be sold, or claimed by your creditors through liens, or similar claims. There is a list of items debtors may keep, so take a careful inventory of your possessions, and make sure you understand what you are entitled to within your state. You may be able to use the federal guidelines if your state’s list is not appropriate in your case. A bankruptcy attorney will have a good idea which guidelines will be best for you.

For some people, however, they may be underwater on a mortgage, or they may own assets that act as a drain on resources, rather than wealth. For these people, a Chapter 7 can unburden them and allow them a fresh start.

This does come with a price. Filing for bankruptcy will affect your credit for seven years or more, depending on your state. You are also required by law to tell any employers or potential creditors (if they ask you) about your bankruptcy. This may affect your ability to apply for a car loan, buy a home, or get a job, so that that into consideration. There are also fees associated with bankruptcy, and plenty of paperwork. Ensure that you have a qualified bankruptcy lawyer to assist you.

Here is a short list of items you will likely have to relinquish in chapter seven bankruptcies.

· Vehicles (you may be allowed one)

· Investments, bonds, CD’s, and other monetary assets

· Collectibles

· Items with intrinsic value, like family heirlooms.

Depending on your case, you may be allowed to keep:

· Tools of your profession, such as computers (if you telecommute)

· Clothing, basic furniture, items needed for everyday living

· Federal benefits from SSDI, VA, or Medicare or Medicaid

· Retirement plans

These lists are non exhaustive, so speak with a local bankruptcy attorney before deciding on the type of bankruptcy you will choose. Each individual case is different.

Bankruptcy can be a difficult and painful process, but with the help of a strong Bankruptcy lawyer in New York, you can sort through the questions surrounding the issue. Each situation will be different, and the amount and type of property you have may determine whether you file a Chapter 7 or a Chapter 13 bankruptcy.

The largest difference in the types of bankruptcies available to individuals is the way debt is handled. In a Chapter 7, burdensome assets are sold off to pay creditors. In a Chapter 13, the debtor may keep all assets, but must create a payment schedule to pay back all debt. A qualified New York Bankruptcy attorney can help you decide which option will best for you. If you have a home or special family heirlooms, a Chapter 7 bankruptcy may not be in your best interests.

A common Bankruptcy mistake is to cash out retirement funds, like IRA’s or 401(k) plans. In most cases of bankruptcy, retirement assets are protected. If you cash out these funds, not only will you be subject to taxes and penalties on the money, but they will no longer be legally exempt, and you may lose them entirely.

Retirement funds may be exempt from bankruptcy liquidations

A bankruptcy doesn’t have to put your financial future in jeopardy. Even if you are forced to liquidate other monetary assets, a qualified bankruptcy attorney can tell you if your retirement savings are safe. It’s important that you understand your rights when declaring bankruptcy in New York.

Avoid the debt management trap

Many debt management companies profit off debtors by misleading them about the difficulty of handling debt, and some may even neglect to pay your structured payments, and leave you in a worse situation than you were when you started. Always employ legal counsel when working with debt management companies, and avoid falling into this big pitfall.

Protect yourself from predatory companies like these by working with experienced bankruptcy attorneys during each step of the bankruptcy process. You might need help liquidating assets and structuring payments, but legal professionals will have your best interests at heart because they are invested in making sure that you succeed.

What transfers are legal, and which are fraudulent?

Some transfers in a bankruptcy case are legal, such in the case of normal business transactions. Many, however, are considered fraudulent. These may include trying to hide assets by giving them to friends or family, or by selling items at a much lower cost to people close to you. This activity is illegal, and it’s a common temptation that gets many people who are filing bankruptcy into trouble.

Work closely with your bankruptcy lawyer during the process to ensure that your transfers are legal. If you are accused of bankruptcy fraud, you should find legal representation immediately.

Avoiding credit scams

Predatory lenders, credit scams, banks, and lending agencies may be causing you many of your financial woes. Work with your attorney to ensure that they are using fair practices while you work through the bankruptcy process.

Chapter 13 and Chapter 11 bankruptcy have certain key similarities that can cause confusion for anyone who doesn’t specialize in bankruptcy.

Who Can File for Chapter 11 and Chapter 13 Bankruptcy?

Chapter 11 bankruptcy is available for businesses and individuals with a very large amount of debts and income.  Filings are available for almost all individuals as well as sole proprietorships; however there are debt/income limits for eligibility. These limits change each year.

Chapter 11 Bankruptcy- Creditors Vote

In both Chapter 11 and Chapter 13 bankruptcy, the debtor and the debtor’s lawyer or law firm create a plan to reorganize and consolidate the debt. In Chapter 13 bankruptcy, the creditors accept the plan assuming it meets
certain legal standards. In Chapter 11 Bankruptcy, the creditors vote to determine whether they will pass or reject the plan.

Under Chapter 11, if the creditors turn down the plan, the debtor can come up with a new plan. The judge may force the creditors to accept the debtor’s plan or the negotiations may simply fail. If negotiations fail, the business will either have to file for business Chapter 7 bankruptcy, or, the case may be dismissed.

To learn more about bankruptcy in the Austin, Georgetown, Leander, or Round Rock area, you can schedule an appointment for a free initial consultation with one of the members of our legal team. Just call 512-322-5367 or
contact our offices online.