When you file for personal bankruptcy, can creditors touch your equity in your home?
I am thinking of filing for bankruptcy. Can creditors touch the equity I have in my home? What assets can they cease?
I am thinking of filing for bankruptcy. Can creditors touch the equity I have in my home? What assets can they cease?
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Depends on where you are as to what can be seized or not. Generally the equity in your home would not be an issue, since it has no value except as loan collateral. The home itself may be looked at, really depends how much you owe and to who. If you have equity, you may be advised to use it to pay off debts and avoid bankruptcy, or restructure debt. Any bankruptcy trustee will advise you free on what your options are.
August 5th, 2010 at 5:06 pmYes, they can. Bankruptcy law does have a "Homestead Exemption" though that protects up to $17,425 in your home’s equity. Other than that, they can take just about anything. There are a few other exemptions, such as limited amounts of appliances and furniture, items necessary for your work (ie tools for a contractor), medications, Social Security, welfare, alimony, etc. You really should at least speak to an attorney though before making a decision.
August 5th, 2010 at 5:06 pmYes, they can liquidate your assets.
However, when you file for bankruptcy, under the new law, you must pass something called a "Means Test." This is a test to see if you qualify to file for bankruptcy. It used to be that filing was a relatively simple process. You petitioned the court for a Chapter 7 and you were released from your Creditors.
These days, it’s not so easy. To pass the Means Test, you must illustrate that you do not earn enough money to pay your bills. And, it is not subjective. There is a salary scale that you must fit into, with variables including the number of dependents you have.
IF you pass the Means Test and qualify for Chapter 7 (clean slate) bankruptcy, you will most likely be able to retain your home and vehicle. It depends on your Means Test score. If you are right "on the borderline" of passing, your attorney will have to do some recalculating for you because your Creditors can petition the Court to liquidate your assets. Although, just because they petition, does not mean the Court will rule in their favor.
So, if you have valuable assets, make sure you have an attorney who knows what they are doing. My suggestion is to NOT go to the ones who offer "quick bankruptcy" for a flat fee. Instead, find an attorney who practices not only bankruptcy, but in other areas of law also. They will need to take time with you in going over every single detail of the possible outcomes and how to forego any action against your assets. Do not sign the paperwork until you are completely comfortable, as you can’t go back and protect your assets once you file with the Court.
If you do not qualify for Chapter 7 and must file for Chapter 11 or 13 (reorganization and repayment) bankruptcy, the Court may allow your Creditors to offset the amount you owe them by liquidating your assets, such as home, boat, vehicle, and/or any expensive items that you own. These can be anything from Coin Collections to expensive electronics.
For information about the Means Test and how to pass:
http://ezinearticles.com/?The-New-Bankruptcy-Law-Means-Test-Explained-in-Plain-English&id=74968
For a good FAQ:
August 5th, 2010 at 5:06 pmhttp://www.creditinfocenter.com/bankruptcy/bkfaq.shtml
The Chapter 7 bankruptcy is applicable if you have no regular sources of income. It works by reducing or clearing off all your debts. You can then make a fresh start without having to worry about having to pay your debts.
Once you file for Chapter 7 bankruptcy, the bankruptcy court assigns a trustee who works as an intermediary between you and the debtors. He oversees everything and checks out if the bankruptcy plan is going as planned.
August 5th, 2010 at 5:06 pmcory I found interesting information about your answer & options here. (this article: Personal Bankruptcy, the myths and facts:)
August 5th, 2010 at 5:06 pmhttp://all-debt-consolidation-loan.blogspot.com/2007/08/personal-bankruptcy.htmlGood luck!
in if learn one thing about bankruptcy it is the first thing you do is hire a lawyer!!!
August 5th, 2010 at 5:06 pm