June 19, 2013 Leave a comment
I 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 firstname.lastname@example.org.
Photo courtesy of Alan Cleaver