Think Twice Before Bankruptcy
Think Twice Before Bankruptcy
Think Twice Before Bankruptcy
Hi this asset protection attorney Gary Fales. Today I want to share some thoughts with you about bankruptcy and asset protection.
There are two types of bankruptcy: reorganization and total liquidation. Chapter 13 and Chapter 11 are the reorganization types, for personal and business, respectively. Chapter 7 is the total liquidation type.
I had a client, and I will change the details to protect his name and to protect values, who had come to see me after he had already started a Chapter 13 bankruptcy. He didn't know about the Nevada Asset Protection Trust.
He had been thinking himself, "I'm going to go into bankruptcy, and they're going to help save my home" or all the other things that you hear advertised about what bankruptcy can do.
He was shocked to find out that the bankruptcy and trustee wanted his home. There was a $40,000 condo, which was completely paid off, that he had inherited. The trustee and bankruptcy wanted him to either sell that condo and place it into the bankruptcy estate, or require the client pay $1,000 a month for five years in order to retain that piece of property.
If you can understand anything about bankruptcy, you know I'm talking about a Chapter 13 reorganization type as opposed to a liquidation bankruptcy. This client was quite frustrated because he really thought that he was going to be able to go into a Chapter 13 bankruptcy and still be able to keep all of his assets.
The truth is Chapter 13 reorganization bankruptcy is more like making a deal with your creditors. If you can get through the plan (that takes about five years) then you'll be able to come out and retain some of your assets.
The difference between that and using the Nevada Asset Protection Trust is that with the Nevada Asset Protection Trust, you have assets that you won't have to forfeit to the bankruptcy court. Instead, you're going to protect them.
If the creditors come and sue you, and you lose, you still have your rights to go bankrupt. It's just that, as a general rule, bankruptcy should be used only as your last option. In the financial sense, it's essentially cutting your head off.
So, it's important to use other strategies that are available to you (including negotiation, short sales, and mediation) while your assets are being protected and shielded and seasoning in the Nevada Asset Protection Trust.
Worst case scenario, the assets are not protected and you have to run to the bankruptcy court to seek protection. But why financially chop off your head, if it can be avoided through the use of other techniques?
So, I will give a word to the wise: think very carefully before you go into bankruptcy when you could have used other tools, such as the Nevada Asset Protection Trust.
This is attorney Gary Fales, wishing you a great day.
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