Your Wages Won’t Be Garnished Right Away Although many people believe that missing a payment or two on a debt can result in a quick garnishment of their wages, this is not the case. Having one’s wages garnished in New York State is the end result of a process that can last for several months. […]
One of the big concerns of consumers who are considering bankruptcy is that they will lose all of their property. In fact, the “I can’t file for bankruptcy because I will lose everything I own” myth is one of the biggest misconceptions out there about the bankruptcy process. Rather than automatically losing all of your property, the bankruptcy court compares your assets against the applicable exemptions for your state to determine whether there is anything to distribute to creditors. The majority of people who file for personal bankruptcy are able to utilize exemption laws to retain all of their property through the process. Each state, as well as the federal system, have bankruptcy exemption laws which are designed to protect property. Some states, such as New York, only allow debtors to use their state exemption laws. Others, such as New Jersey, allow debtors to choose between either state or federal exemptions. Certain types of assets, such as IRAs and 401(k) accounts, are protected by federal law regardless of which exemption regime applies. Exemptions are rooted in public policy, with the idea being that it is unfair to allow consumers to shed unmanageable debt and be left with no property with which to start over. As a result, exemption laws designate certain types of property, up to specified dollar amounts, as exempt from the claims of creditors and the trustee. For example, Florida has an unlimited homestead exemption for long-term residents. This means that, in the event a Florida resident were to file for bankruptcy, their home would be exempt. They would not lose their primary residence regardless of its value. Similarly, the state of Illinois allows debtors to protect up to $2400 of equity in a car. This means that if you own a car worth $10,000 that has a loan of $8,000, you can file for bankruptcy in Illinois and keep your car. In this example, your $2000 of equity is under the maximum of $2400 allowed under the exemption statute. Even if the hypothetical changed so that there was $3,000 of equity in your automobile, you still would have the option to retain your car. Although bankruptcy trustees can liquidate property to access its nonexempt value, doing so requires a great deal of time and effort. In many cases, trustees are willing to enter into Cash Settlements with Debtors Rather Than Taking the Time To Sell Their Property. Exemption laws vary greatly by state, it is usually a good idea to meet with a local bankruptcy attorney to discuss how your property will be affected. Below, we organized a library of articles that touch on the subject of bankruptcy exemptions. We hope these articles will be a valuable resource as you weigh your options. Thank you for visiting the National Bankruptcy Forum.
How to Keep Your Tax Refund and File for Bankruptcy It’s that time again!!! Tax Season! You are looking forward to receiving a big tax refund check and you are also working hard to get your bankruptcy case filed. So, what happens to your tax refund in a bankruptcy case?? We’ve said it time and again […]
We all know why people are filing for bankruptcy. With a tepid recovery, jobs are hard to find, home values are still low, and fear and uncertainty are preventing business owners from expanding their businesses. The costs of health care are rising even with the Affordable Care Act in play. People are finding themselves saddled […]
Bankruptcy Filers Aren’t Meant To Be Left With Nothing Many people mistakenly believe that they will lose everything when they file for Chapter 7 bankruptcy. This is not the case. The bankruptcy code allows debtors to claim certain necessary property as off-limits from creditors and the trustee. That property is the debtor’s ‘exempt property.’ The […]
What do you do when your credit card company sues you? You’ve received notice that your credit card company is suing you. What do you do now? The first step is to read the complaint carefully. Your creditor will most likely sue because you haven’t paid but can also sue you for defaulting on any term […]
Everyone preparing to file for bankruptcy wants to know the cost. After all, bankruptcy usually comes at a time when money is tight. Filing Fees and Required Courses Bankruptcy filers must pay a filing fee. For a Chapter 7 case, the fee is $335. For a Chapter 13 case, the fee is $310. The Bankruptcy […]
Tell Your Bankruptcy Attorney Everything! Have you ever used the expression ‘on a need to know basis’? Well as a bankruptcy attorney, I am on a need to know…………everything basis. Clients come to my office for help with financial problems. They are understandably very open about their debts and how they were incurred. What debtors […]