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Exemptions– You Can Keep Your Property In Bankruptcy!!

Wednesday, 30 October 2013 08:00
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     Is it possible to keep your assets while filing for bankruptcy? YES! You are not left without anything in a Chapter 7–and in a Chapter 13 you are entitled to keep everything. And, for almost all Chapter 7 filers, you can keep all your assets. Sometimes it takes a little planning, but most people are entitled to keep all of their assets.

     When filing a Chapter 7 Bankruptcy, a trustee is appointed and has the authority to sell your non-exempt assets in order to pay off your creditors. However, federal and state law lists exemptions which were created to allow individual debtors (you) to "protect" or exempt your assets from being sold by the trustee to pay off creditors. When exempting your assets in a chapter 7 under federal or state law, you are protecting your property, so it can't be sold to pay off your creditors. For example, you own a car worth $3,500.00 and your state allows an auto exemption of $4,000.00; thus, because your equity is totally protected, you are then able to keep your vehicle. Exempting your property when filing a bankruptcy allows you to reach the main purpose of the bankruptcy process of having a "fresh start." Regardless of how much a debtor owes, exempt assets are considered essential to economic survival and should provide the debtor a financial fresh start.

     In a Chapter 13 Bankruptcy you are reorganizing your debts with a plan to pay off your creditors to the appointed trustee in a three- to five-year term. The amount of your monthly payment plans will depend on your income, expenses, and debts. Priority debts will always be paid in full such as child support, spousal support, certain taxes, etc... For non-priority unsecured debts, such as credit card debt and personal loans, you may not have to pay back in full but this will depend on your income, debts and additionally, your exempt assets. In a Chapter 7 bankruptcy, if you are unable to fully exempt an asset, the trustee would then be able to sell that asset to pay a creditor; conversely, in a Chapter 13 your assets will not be sold. There are complicated rules regarding the formulation of your pay-back plan, but under a Chapter 13 you will be able to retain all your assets even if they are non-exempt, so long as you provide a "good faith plan" which commits all your disposable income (income left over after all your bills are paid) to the plan.

     Exemptions will apply to almost all your assets, allowing you to keep what is yours and giving you a fresh start once you have been successfully discharged from your bankruptcy. To learn more about California's exemptions click on this link http://www.nolo.com/legal-encyclopedia/california-bankruptcy-exemptions-property-assets.html.

     The Law Offices o f Gloria D. Cordova, Inc., specializes in all bankruptcy services. Check into our website regularly to find Bankruptcy post that may be helpful for you. Call in today to set up a free consultation so we can help you become debt free. Also "like" our Facebook page at https://www.facebook.com/gcordovalaw?ref=hl.

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