Protecting your assets in bankruptcy

Protecting your assets in bankruptcy

A key concern for practically everyone considering bankruptcy is whether their assets will be protected – i.e. whether or not they will be able to hang on to their home, car, and other assets.

While bankruptcy law can be complex, and while everyone’s case is unique, in broad strokes the answer is that all of your assets will be protected.

Types of Bankruptcies

Chapter 13

Chapter 13 bankruptcy, also known as “reorganization” bankruptcy, is designed to allow you to protect (keep) all of your assets, and those based on a secured debt. A secured debt is one backed up by collateral, such as the mortgage on your home. Chapter 13 is known as a reorganization bankruptcy. It allows you to pay back the debt you are currently unable to pay, based on a 3 – 5-year repayment plan, on terms that you can currently afford. Thus, your assets are protected.

Chapter 13 bankruptcy is available only when you have an income level that is sufficient to pay off your debt under the terms of the repayment (reorganization) plan.

Chapter 7

The basic advantage of a Chapter 7 bankruptcy is that unsecured debt such as credit cards, medical expenses and the like are discharged (eliminated forever). However, in theory, Chapter 7 bankruptcy is also known as a “liquidation” bankruptcy. But in practice, this “liquidation” almost never actually occurs.  In New Jersey, there is an extensive list of “exemptions” (items that are protected from liquidation by federal law). The exemptions available in New Jersey are much more serious than many other states.

So the good news is that here in New Jersey, bankruptcy of either kind almost never results in any loss of assets.

But bankruptcy law is quite complex and very time-sensitive. It is almost never a good idea to “go it alone.” We suggest you seek out a highly experienced, highly competent bankruptcy attorney to make sure you come out on top!

Let me help you navigate the bankruptcy process. Contact me today to schedule an appointment. Remember, there is life after bankruptcy and it starts here.

Read more about filing for bankruptcy in New Jersey and the NJ state exemptions.