If you are going to be undergoing a bankruptcy case it’s very important that you speak to an attorney first. When working with a legal professional you can take advantage of the foresight and expertise of somebody that knows the bankruptcy code inside and out. When filing for a bankruptcy case, an attorney will be able to help you protect your assets during bankruptcy by choosing a chapter 13 bankruptcy repayment plan or Chapter 7 bankruptcy.
Under Chapter 7 bankruptcy, non-exempt assets may be liquidated or seized by your creditors in order to convert them into cash which will be distributed to repay your debts. By working with a professional attorney you can work at establishing the bankruptcy exemptions for your case and protecting your property for the future. Bankruptcy exemptions will help you to keep access to some of your most needed property as well as potentially some of your cash. Here are some of the top bankruptcy exemptions that you could look into with your attorney!
The Main Exemptions Covered Under a Typical Bankruptcy
Bankruptcy exemptions will allow you to keep access to a certain amount of assets under Chapter 13 bankruptcy. Florida bankruptcy exemptions include your main homestead without any limits to the value, your personal property, your vehicle and some wages. Your 401(k)s are also exempt up to a cap.
This means that the main assets you can protect will include motor vehicles that you need especially for your job and commuting, some of your household goods, furnishing and clothing as well as your retirement accounts, pensions, 401(k)s and profit-sharing plans and Social Security payments. Working with an attorney could have you establishing a deal with your chapter 7 trustee to buy back some of the non-exempt property. This is often based on the appraisal of your assets and how quickly the liquidation of your assets may be able to repay your creditors or settle your debts.
Proper Planning is Crucial Before a Bankruptcy
It’s possible that you could use asset conversion strategies with your current financial situation to protect more of your assets when you file for bankruptcy. Asset conversion strategies before your assets are liquidated in a bankruptcy will help protect assets and help you to access more of your funds for useful items. This needs to be done strategically in order to avoid the chance that you could be denied your bankruptcy claim. Working with an attorney could allow you to handle some asset conversion strategies such as purchasing a car and necessities before bankruptcy, making larger contributions to your retirement accounts, paying down more of your mortgage, taking out a new life insurance policy or paying down non-dischargeable debts while you still have the extra financial freedom.
Advanced Strategies For Planning
There are some less common techniques that could be used to protect assets in bankruptcy. By coming to visit an attorney and receiving an assessment for your current financial situation it is possible to protect more of your assets using some less common techniques such as the following.
Asset Protection Trusts: independent trustees will be responsible for running the trust and controlling all distributions. The trust also comes with a series of spendthrift clauses but it can protect more of your money.
Equity Reduction: it’s possible that you could reduce the equity of an asset such as your property by encumbering the asset. Encumbrance must be taken for a legitimate purpose and the encumbrance can be voided if it’s taken out within one year of filing for your bankruptcy.
Financing Through Accounts Receivable: if you own a business it’s possible that you could borrow against the businesses A/R. If you do this correctly you could encumber the future value of your business and make the process of liquidating your business an unattractive option for a chapter 7 bankruptcy trustee.
Avoiding the Chance for Fraud or a Bankruptcy Denial
Of course you can work with an attorney to legally protect your assets but it’s very important that you are protecting these assets according to the bankruptcy code. Transferring control of assets after you file for bankruptcy can often lead to difficulty as your bankruptcy trustee could void the transfer or your access to these assets. A fraudulent transfer is often closely scrutinized as well and this can lead to the chance that your bankruptcy claim could be denied.
If you are interested in protecting more of your assets during the bankruptcy it’s crucial that you talk to an attorney before you go through the process of filing. If you own considerable assets, working with a skilled attorney can help you to explore your options and to work at legally protecting your assets without breaking the law. Do not attempt to conceal or transfer your assets before discussing what you would like to protect with a bankruptcy lawyer. Before making any type of big financial move or filing for bankruptcy for the first time it is always best to consult with a legal professional to learn the best path for your finances.
Contact us today if you have any questions about filing for bankruptcy or protecting your assets!