Millions of Americans are suffering from an insurmountable debt. Many of these people have no idea of what they can do to get out of this financial trouble. When asking for help, the terms bankruptcy and debt consolidation frequently come up. Depending on the amount of debt the individual is carrying many times debt consolidation is not even an option. The only way to get out of large amounts of unsecured debt is filing Chapter 7 bankruptcy. Chapter 7 bankruptcy will wipe out all unsecured debts like credit cards, medical bills and personal loans. The first thing people think of when they hear the word Chapter 7 bankruptcy is that they are going to lose all their property. People fear that the bankruptcy trustee will take away all of their collectibles and family heirlooms to be sold at auction and pay their debts. When in reality, this is more of a myth than it is true.
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Most people's valuables or what they consider to be valuables are only worth something to themselves. Debtors filing bankruptcy think that if they list their collectibles the trustee will immediately seize them for sale. Many individuals that are filing bankruptcy get a rude awakening when they find out that their precious collectibles are really not worth as much as they thought they were. Many collections are very hard to sell and not worth the time of the bankruptcy trustee to attempt the process. One thing that we haven't even covered is the debtors filing bankruptcy are also protected by a liberal amount of exemption laws. Bankruptcy exemptions vary from state to state, but in most areas offer generous amounts for personal property. If you can't exempt it under one of the different categories every debtor has an ace in the hole with the wild-card exemption. The bottom line is, Chapter 7 bankruptcy trustees are not interested in selling off these kinds of items.
When filing for bankruptcy, the trustee is responsible for checking into the debtor's assets, and collecting any property that is not exempt. The idea is, the bankruptcy trustee is supposed to sell the non-exempt property and apply the proceeds towards the debts. The bankruptcy trustee also needs to consider the costs of administering the case. In many cases, it costs more to collect and sell property than the value of the proceeds. Most bankruptcy trustees won't even attempt to sell property and distribute the proceeds to the creditors unless they can make a substantial amount to cover their costs.
If a person has a valuable item like a gold watch or some expensive antiques and they do not fall within the state exemptions it might warrant the sale of the property by the bankruptcy trustee. This does not happen very often. In general, the bankruptcy trustee doesn't want to collect and take away the property of the individual filing for bankruptcy. As long as the property is protected by the exemption laws they don't want it. Sometimes the debtor will be able to work something out with the Chapter 7 trustee to buy back items from the bankruptcy estate as long as they have the money to do so. And a Chapter 13 bankruptcy, debtors can keep all of their property if they work out something with the creditors and complete the 3 to 5 year payment plan. Depending on the amount of property you own and are considering filing bankruptcy, it's in your best interest to consult a bankruptcy attorney to make sure that your property is protected to the extent of the exemption laws in your area.
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