It is commonly (and incorrectly) believed that filing bankruptcy will cause you to lose all your assets. This assumption is incorrect and harmful to people who could benefit from bankruptcy. First, bankruptcy is not for people with no money or assets. Bankruptcy is for people who have a part of their lives they want to protect, such as a home, business or vehicle. Filing bankruptcy may be the best chance you have for saving your most important assets. The following examples can explain further.
How Filing Bankruptcy Can Protect Your Assets
Chapter 13 bankruptcy is designed to help people keep secured debts, such as a home or vehicle. That is because Chapter 13 requires debtors to complete a three to five-year repayment plan to pay back debts. After completing the repayment plan, your remaining debts are discharged and you may keep your property.
For example, if you were facing foreclosure and creditors were on the verge of seizing your vehicle, Chapter 13 could save both assets in this case. Once you file for Chapter 13, an automatic stay is issued. The automatic stay can halt collection attempts and allow you the chance to complete your repayment plan.
Even if you file for Chapter 7 bankruptcy, there are mechanisms or exemptions that allow you to keep certain assets. For example, you may be able to reaffirm debts in Chapter 7 bankruptcy. This is where you enter into a new contract with the lender and agree to pay the remaining balance on your debt. Missouri also has the Homestead Exemption, which protects up to $15,000 in equity in your home. If you have less than $15,000 in equity, the trustee cannot seize your home.
If you are struggling with foreclosure or facing the loss of other important assets, our attorneys are here to help. The Kansas City bankruptcy attorneys at The Sader Law Firm can help you discover if there are options for keeping your vehicle, home or business.