subject: Discussing Assets With Your Bankruptcy Attorney [print this page] There are many things to talk about with your bankruptcy attorney, but perhaps none are more vitally important to discuss than the protection of your assets. Assets are things you own. This includes cash, family heirlooms, personal items and even your home and financial investments. In the process of going bankrupt, the goal is to liquidate assets in an effort to repay lenders whatever can be paid. Then, the remaining debt is discharged or forgiven. This can put many people on edge. What does it mean for the property you own?
Assets Without Equity
One of the first things that the bankruptcy attorney will tell you is that those assets that do not have equity, or real value are unlikely to be a factor. For example, perhaps you own a home that is valued at $225,000 but you owe $220,000 on it. The cost of selling that home and paying closing fees does not make liquidating this property a good idea. Rather, you can reaffirm your ownership and mortgage with the lender and stay in the property. Other items, such as personal effects, may not really have any value if sold. Those are also likely protected.
Equity-Filled Assets
If you do have items that are valuable, the first step that the lawyer will tell you about is the valuation of those items. The goal here is to find out what amount of money could be fetched for an item if it was sold. If that value is high, or higher than the protected limit, then you may be forced to turn over the asset. However, items that are not going to net a profit are not usually worth selling.
Your Protected Value
Each state has specifically outlined asset-protections called exemptions. These will list the type of item as well as the dollar amount protected under the code. There is also a set of exemptions for the country as a whole. You can often choose which to use. You can keep up to a certain value of these items. For example, some estates have homestead exemptions, which protect real estate up to $5,000, $10,000 or another specific value. You may be able to keep one vehicle. You may be able to protect valuables up to a certain limit. Your lawyer will discuss these options with you carefully.
A bankruptcy attorney can help you to protect your assets. Though it is not always possible to do so and you should never try to hide them from the court system, many people do find that protecting what is most important to them is possible. The good news is that your lawyer can help you to do that.
