Sometimes, often due to circumstances beyond your control, you may accrue more debt than you can afford to pay back. Creditors may take drastic measures to try to collect from you. Though it has a negative connotation in many people’s minds, bankruptcy can actually be beneficial. It protects you from harassment by creditors and gives you a fresh financial start by canceling out most of your debt.
The bankruptcy process is overseen by a trustee appointed by the court. The trustee requires you to provide detailed financial information regarding your debts, income, and property to provide a clear financial picture.
How Different Types of Bankruptcy Handle Property
The Bankruptcy Code has many chapters, but individuals usually file under either Chapter 7 or Chapter 13. Chapter 7 is a liquidation bankruptcy, which means that some of your property may be sold to pay off your debts. However, you do not lose all of your property, and some people who file Chapter 7 don’t end up losing any. This is because the law makes some of your property exempt, meaning that it cannot be liquidated. It is important to disclose all your property when filing Chapter 7 so that the trustee can accurately determine which is exempt and which is not.
Chapter 13 bankruptcy involves reorganizing your debts into a payment plan rather than liquidating them. Nevertheless, it is still important to disclose all your property when filing Chapter 13. The trustee has a responsibility to investigate your financial affairs and needs your cooperation in the form of disclosure to fulfill his or her duties.
What Property Needs To Be Included in the Disclosure
When you file for bankruptcy, you need to disclose all the property you own. You may think that items of little or no value do not count in a bankruptcy, but that is not true. Everything you own must be disclosed, from the seemingly worthless to the priceless.
In the interest of transparency, the law requires you to disclose your property when you file. Failure to do so could incur criminal charges of bankruptcy fraud. Not only that, but failing to disclose assets could also prevent the trustee from discharging your debts, meaning that you cannot get the relief that you require.
Filing for bankruptcy is a complex process with little to no margin for error. Contact a law office and experienced attorneys, should be able to guide you through the process successfully.