One big question that people considering bankruptcy ask is what kinds of assets creditors can take during the bankruptcy. The answer depends on the kind of bankruptcy you have as well as the exemptions you take.
If you go through a Chapter 13 bankruptcy, you will not be asked to liquidate any of your assets. If you’re concerned about losing your assets but have an income coming in, this might be a better option for you compared to Chapter 7 bankruptcy.
What happens during a Chapter 7 bankruptcy?
On the other hand, if you go through Chapter 7 bankruptcy, you may have to liquidate some of your assets. In this case, creditors may be able to seek payment. The compensation they receive comes from your bankruptcy trustee collecting nonexempt items and having them liquidated for a profit.
The good news is that there are exemptions in bankruptcy. That means that your attorney can help you minimize the number of assets you lose or have to give up. For example, there may be:
- Motor vehicle exemptions
- Homestead exemptions
- Personal property exemptions
- Pension exemptions
- Wildcard exemptions
For instance, Illinois allows a $2,400 exemption for a personal vehicle. This may help you protect your method of transportation against liquidation.
Is it beneficial to work with an attorney on your bankruptcy?
It’s beneficial to know your legal rights whenever you are looking into bankruptcy and going to court. There are many steps required to complete a bankruptcy, and there are also deadlines to meet. Your attorney will help you minimize your losses while assisting you in getting out of as much debt as possible.