What Can You Keep When You File Bankruptcy?
One of the most common fears that people experience when they file for bankruptcy is that they will lose all of their possessions. While you could potentially lose some of your possessions, there are some items that cannot be taken through bankruptcy. The type of bankruptcy that you file will also have an impact on whether you get to keep your property.
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Type of Bankruptcy
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The type of bankruptcy will play a vital role in whether you get to keep your property or give it up to the court. If you file for Chapter 13 bankruptcy, you should get to keep all of your property. This is a type of bankruptcy in which you set up a repayment plan with your creditors, and the court will not liquidate any of your assets. When you file for Chapter 7 bankruptcy, some of your possessions can be liquidated to repay your debts.
What Can Be Taken
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When you file for Chapter 7 bankruptcy, the bankruptcy trustee will look at your property to determine what would be best to take from you. The trustee will generally think about what you need to survive and will not take any of those items. For example, the trustee could take a second car or a second piece of property that you own. If you have cash sitting in a bank account, the trustee will likely take a portion of it. He could also take family heirlooms, collections and expensive musical instruments.
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Necessities
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When you file for Chapter 7, the bankruptcy trustee will allow you to keep most of the items that are considered to be necessities to everyday life. For example, you will generally get to keep at least one car up to a certain amount of value. You will also get to keep a certain portion of equity in your home, which generally allows you to keep the house. You can keep your clothes, household appliances and other household goods that are considered to be necessary.
Other Items
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Besides the bare necessities, there are also a few other items that you might be able to keep even though you filed for Chapter 7 bankruptcy. For instance, you can generally keep any assets that you have in a pension or a retirement account, such as a 401k or individual retirement account. You can also keep tools of your trade that are necessary for work. Most of the time, you can even keep your personal jewelry, even if it is valuable.
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