Do you have some special possession you want to keep in bankruptcy? Because you probably can.

corvetteIs there some special heirloom you have or a piece of furniture you like or do you have an old car that you just can’t lose?  Maybe you own an old jewelryclassic ’57 Chevy or Corvette that you want to fix up someday.  You may have a great number of debts which you realize you can’t afford to pay but you are worried about the safety of your favorite possessions if you do file for bankruptcy.

The good news is that you probably can keep these possessions as long as the property’s value is less than the exemptions allowed in bankruptcy.  In bankruptcy law there are very liberal exemptions and these exemptions are what allow you to keep property after the bankruptcy is over.

One very helpful exemption is something called the “wildcard” exemption that you can use to protect any kind of property that you own.  At the time of this writing the wildcard exemption is $26,425.00 and that is pretty generous.

There are other exemptions besides the wildcard.  There is one for your car, and one for your furniture, clothes, and household items.  There are separate exemptions for cars, jewelry, and tools of the trade and don’t worry about you retirement account because that is almost certainly exempt.  Your attorney can advise you about all of the applicable exemptions in your state.

Your property will fit within the wildcard exemption as long as your property is worth less than $26,425.00.  If it does then you can keep it.  To value the property you want to go to a website like Kelly Blue Book for cars or you can go to Ebay or even Craig’s list to see what items similar to yours are selling for.

To get a more accurate valuation of the property you can hire an estimator or property appraiser who, if you pay him, will give you his or her valuation of the property.  If the property is of a special nature like a record collection then a property estimator who owns a record store could do the valuation.  The same thing applies for jewelry or a stamp collection, or an old gun from the civil war (jewelry even has its own separate exemption).  There is usually someone out there who can accurately value your property whatever the type.

valueRemember the bankruptcy trustee can only take your property if it has a value beyond your exemptions.  This is why it is so important to establish the fair market value of the item(s).  So if you (and your bankruptcy attorney) show the trustee that the fair market value is less than the exemption amount that you claim then you will usually be okay.

It is possible that the trustee can get his own valuation which could be higher than yours but if you get a reliable appraiser for the property you can usually defend your appraisal.  It is always good to consult with a bankruptcy attorney if you have any questions about whether you can keep your property in bankruptcy and if you should or should not file bankruptcy.

I am a San Diego bankruptcy attorney.  For further questions please visit my websites at www.farquharlaw.com or www.freshstartsandiego.com.  Or call my office for a free consultation or for any other advice about bankruptcy or debt at (619) 702-5015. Call now for free credit report and analysis!

For a free e-book on “13 things to do to prepare for your bankruptcy filing” please e-mail me at farquharesq@yahoo.com.

Corvette by Zombieite.  Jewelry photo courtesy of Gnilenkov Aleksey.

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Do I have to give up everything I own to file bankruptcy? No!

property 2I am asked this question probably once a week.  Many people believe that they must lose everything they own to file for a bankruptcy.  This is not true.  I believe that this comes from some of the guilt and shame that people feel when they file.  They believe that they are doing something almost dishonest.  They believe that they must “honor” their debts.  The collection agencies that attempt to collect on these debts will encourage these feelings of guilt to dissuade people from filing for bankruptcy and to get people to pay them.

Many of my clients also believe that they have somehow failed when they file for bankruptcy and failure is just not accepted in this country.  They then try for years to pay debts that they cannot afford thinking that they will then not be failures.  I usually remind them that many successful companies have filed for bankruptcy over the years and individuals have the same right to do so.  In fact the filing of bankruptcy can get rid of debt and put an individual on the road to success.

The reality is that bankruptcy is a legal and moral solution to your debt problems and you can keep most of your property in the bankruptcy.  This is because there are very generous bankruptcy exemptions.  These exemptions allow you to keep a lot of stuff.  Your retirement funds can be kept with one exemption, your car with another, a certain amount of jewelry with another, and even “tools of the trade” if you own a business or use those tools in your line of work.

In addition there are homestead exemptions for equity in your house and the contents in your house, like our personal belongings and your clothes, can usually all be exempted.  Anything that exceeds these exemptions can be put into the $23,000 “wildcard” exemption which can be used for cash, stock, bonds, or anything else.

Insurance and social security money and your current income are also exempt so call a bankruptcy attorney if you need a bankruptcy and get a consultation about your property.  Most likely you can keep it.

I am a San Diego bankruptcy attorney.  For further questions please visit my websites at www.farquharlaw.com or www.freshstartsandiego.com.  Or call my office for a free consultation or for any other advice about bankruptcy or debt at (619) 702-5015. Call now for free credit report and analysis!

For a free e-book on “13 things to do to prepare for your bankruptcy filing” please e-mail me at farquharesq@yahoo.com.

Photo courtesy of Alan Cleaver

Bankruptcy Good News! Because of bankruptcy exemptions you can usually keep all of your possessions after filing for bankruptcy!

Most people are afraid to file bankruptcy because they wrongly believe that they will have to surrender some or all of their possessions once they go bankrupt.  This is not true and has not been true for hundreds of years.  You will usually not have to surrender any possessions after filing bankruptcy in the vast majority of cases.  This is all because of the magic of bankruptcy exemptions and these exemptions have an interesting history.

When you file for bankruptcy a bankruptcy estate is automatically created which includes all of a debtor’s possessions.  These possessions could be sold by a bankruptcy trustee if it were not for the magical exemptions.  Exemptions allow debtors to take their property outside of the bankruptcy estate and keep it for themselves.  A Trustee cannot touch any properly exempted property.  This is what makes bankruptcy so attractive to you when your debt load gets excessively high.

Long ago it was true in England that a debtor had to give up all of his possessions to file for bankruptcy.  This included literally the shirt on his back.  In those days bankruptcy laws required a debtor to turn over all of his clothes to his creditors.  This resulted in public breaches of the peace.  A judge in old England responded with the very first bankruptcy exemption.

This was an exemption for the debtor’s one suit of clothes.  It allowed the debtor to keep his clothes so he would not be forced to break the public nudity laws.  Judges could simply not allow a situation where a person exercised their legal right to file for bankruptcy but in doing so were forced to break another law which was the law against public nudity.

That old decision started the ball rolling and bankruptcy exemptions have been expanding ever since.  Cooking implements were added and then furniture.  Homes were later included in exemptions so people could have a place to live and not forced to be homeless by bankruptcy.  Vehicles were added so debtors could get to work as were tools of the trade,  jewelry, as well as a few others.  In addition to these exemptions at some point in America we added a blanket “wild card” exemption into which a debtor can fit property of any kind.

Currently this wild card exemption is over $23,000.  In it you can protect cash, stocks, bonds, jewelry, collectibles, or any kind of property you see fit.  This is a very generous exemption and it is why most people can keep most of their property in a bankruptcy.  Most of my clients historically do not have assets in excess of this amount and therefore they can file bankruptcy and get rid of most of their debts and they can usually keep all of their assets.

So that is good news for you if you are considering filing for bankruptcy.  Don’t worry about your property.  Just contact a bankruptcy lawyer before you file to get your property properly exempted and you can move on debt free after your bankruptcy discharges.

I am a San Diego bankruptcy attorney.  Please visit my website for more information at www.farquharlaw.com or www.freshstartsandiego.com.  Or call my office for a free consultation at (619) 702-5015.

For a free e-book: “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING” please send a request by e-mail to: farquharesq@yahoo.com.

New bankruptcy law (AB 929) will likely allow you to keep more property in bankruptcy in California if it passes!

AB 929 is a bill has passed the assembly and is now in the California senate and will be taken up by the Senate Appropriations committee soon.  This bill is good news for all who file bankruptcy in the state of California because it increases the allowable exemptions in bankruptcy.  Bankruptcy exemptions are the mechanisms that allow debtors to keep property in bankruptcy and they prevent the bankruptcy trustees from seizing those assets to pay debts.

Of course the bankruptcy trustees are against this bill because it would mean that they get paid less because they are paid when they seize and sell property in bankruptcy for the benefit of creditors.  The law establishes higher levels of exemptions for property like vehicles, jewelry, works of art, and tools of the trade (business equipment).

These changes in the law will allow many more people to file for bankruptcy if they have a lot of personal property.  Many of my clients before would lose property in a bankruptcy if they filed so they chose to not file.  As a result of this law the number of bankruptcies is bound to go up in California.

Most important of the exemption increases is the homestead exemption.  That is the one that allows you to keep your house and the equity in it.  The individual homestead exemption is set to go up from $75,000 to $150,000.  The family exemption from $100,000 to $250,000, and the elderly/disabled/low-income will go up from $175,000 to $350,000.  These increases are huge and mean a lot.  Many of my clients who could not file before will now qualify for a Chapter 7 full discharge bankruptcy.  This is great news if you have equity in a home and many people still do in California.

These bankruptcy filers can now keep their home in a bankruptcy even if they have a great deal of equity. in their home.  With the new loan restrictions instituted by the banks the equity is only on paper anyway.  They cannot access it like they could 3 or 4 years ago because they would never get approved for an equity loan without perfect credit and perfect income.  The reality is that if people have these things then they do not usually need bankruptcy.

Most people who do consider bankruptcy have a large amount of unsecured credit card deb which they are usually behind paying on so their credit score is down.  If they have lost a job or have had an illness or an auto repossessed then they are in even greater need of a bankruptcy but are extremely unlikely to secure an equity loan.

So I would argue that this is good law that allows people top keep not only more of their personal belongings but also allows them to keep their house and still discharge their debts.  Fewer people will therefore forced out of bankruptcy and into limbo where they can neither file nor pay their debts.  It is a good day for bankruptcy filers.

I am a practicing bankruptcy attorney in San Diego.  You can visit my website at www.farquharlaw.com or www.freshstartsandiego.com.  Or call my office for a free consultation at (619) 702-5015.  Call now for free credit report and analysis!

For a free e-book: “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING” please send a request by e-mail to: farquharesq@yahoo.com.

Do I need a chapter 7 bankruptcy attorney to do my bankruptcy or can I do it alone?

I believe that you do need a chapter 7 bankruptcy attorney to file your bankruptcy for you.  Bankruptcy filing is a difficult process and it impacts many areas of your life.  Filing a bankruptcy is far too complicated to do alone and I believe that you would be much better off with an attorney to assist you for the following reasons:

1) Property– A chapter 7 bankruptcy attorney can help you list, exempt, and save your personal property and your real estate.  He or she can determine if you transferred any property recently out of your estate or if any property was transferred to you recently.  This makes a big difference for your case.  You want to be aware of the fraudulent transfer laws and avoid losing any property in the bankruptcy.  In California the trustees can look back four years to determine if they are going to reverse any property transfers (and possibly take your property from you).  A chapter 7 bankruptcy attorney can help you to protect your property so it is not taken by the bankruptcy trustee.

2) 341 hearing– A chapter 7 bankruptcy attorney will accompany you to the 341 meeting of the creditors.  The creditors rarely show up but the trustee always does.  The attorney can prepare you in advance for the hearing and then deal with any issues that arise with the trustee.  Also a chapter 7 bankruptcy attorney will invariably have attended many such hearings (if he or she has experience doing bankruptcies) and he or she will know what to expect there.

3) Software and electronic filing- Bankruptcy attorneys that do chapter 7s probably file the cases electronically which is a much easier way to file than the old “over the counter” way.  The software that is used by a chapter 7 bankruptcy attorney to do this is far too expensive for you to buy just for you to do your bankruptcy.  With the software a chapter 7 bankruptcy attorney can efficiently and correctly complete your case and file it with the court.

4) Deciding which set of exemptions to use- Deciding which set of exemptions to use in a chapter 7 case may require a bankruptcy attorney to analyze your situation.  There are many issues relating to whether you should choose the “703” set of exemption with the “wild card” or the “704” set if you have a house with equity in it that you need to homestead.  You must choose between the two and a chapter 7 bankruptcy attorney can advise you of the issues you face as you choose.

5) Download credit reports-Most bankruptcy filing software programs have the ability to download your credit reports into the bankruptcy case.  It is a tremendous advantage to have credit reports from all three major credit reporting agencies directly put into your case so there are no mistakes.  These credit reports will accurately reflect what these agencies say you owe and the reports will come complete with the dates that you made the various charges to your credit cards.  These dates will tell the trustee when you were incurred your debts so there will be no mystery as to how old they are.

You can get these reports yourself and enter the information manually but it is a great advantage to have this direct and efficient system to do it for you.  The chapter 7 bankruptcy attorney can then compare that information with your creditor’s bills to make sure that your creditor information is listed in your bankruptcy as accurately and completely as possible.

6) Assistance with the means test– The means test is very difficult to fill out by yourself.  It was added to chapter 7 bankruptcies in 2005 to force debtors who earned too much income into a chapter 13.  The rational behind the test was that if they had enough extra income then they had the “means” to pay their debts back.

A chapter 7 bankruptcy attorney will use the same bankruptcy filing software to help him or her complete your means test and an experienced bankruptcy attorney will undoubtably have worked on many means tests for a number of clients.  After examining your situation the attorney can determine if you pass the test and he or she can look to see if there is anything you can do to pass in the future.  Also the attorney can make sure that you get the full use of all of your deductions to the means test so you can pass.

6) Representation in court– If something goes wrong with your bankruptcy case or if you need to defend against a challenge to the dischargeability of a debt then you will need a chapter 7 bankruptcy attorney to represent you in court.  Only an attorney can represent you in court and a chapter 7 bankruptcy attorney should be familiar enough with the issues to do so.   Having an attorney on the case already is a big advantage if things do go wrong and you wind up before a judge.

7) Reaffirmation agreements– You may need to reaffirm your car debt in the bankruptcy if you want assurance that the creditor will not repossess it.  In California, according to the Dumont case (decided in the 9th circuit), an auto finance company can repossess you car after a bankruptcy even if you are current on the payments. Many of my clients don’t like this uncertainty and they demand a reaffirmation agreement even if I advise against it.

I have often ended up before a judge in bankruptcy court with these cases and the judges seem to not like these reaffirmation agreements.  If you have a chapter 7 bankruptcy attorney then you will have someone who can argue for your reaffirmation agreement in court and this gives you a better chance of getting it approved.

There are other reasons but these are some of the main reasons why you should use a chapter 7 bankruptcy attorney to file your bankruptcy case.  They will facilitate and expedite the process and be by your side when you need them.  If he or she is experienced then a chapter 7 bankruptcy attorney can be invaluable to you for filing your bankruptcy.

I have seen debtors with no chapter 7 bankruptcy attorney show up at 341 hearings.  The often get continuances for not filling out their schedules and means test correctly.  Some draw a representative from the U.S. Trustee’s office who also looks over their case and some even get their cases dismissed.

Don’t let this happen to you.

For more info. check out my websites at:   www.farquharlaw.com or www.freshstartsandiego.com.

I am a bankruptcy lawyer in San Diego.

For a free e-book: “13 THINGS YOU SHOULD DO TO PREPARE FOR YOUR BANKRUPTCY FILING” please send a request by e-mail to: farquharesq@yahoo.com.