One of the things that I am most frequently asked by people when they are contemplating bankruptcy is, “How can I protect my assets when I file a bankruptcy?” It’s a great question that is extremely important to everyone considering the bankruptcy process. While the discharge afforded by bankruptcy is a massive benefit towards resolving your debt, many people contemplating bankruptcy are often concerned that it will come at the cost of their personal possessions and assets. The good news is that bankruptcy provides you with extensive safeguards that can protect many of the most significant things you own both during and after the bankruptcy process.
The primary way assets are protected in bankruptcy is through “exemptions”. Fundamentally, exemptions are categories of property that are protected up to certain cash limits in the bankruptcy process. Assets that fall within these exempt categories and have a value that does not exceed the protected limit for that category are considered exempt, while assets that do not fall within one of these exempt categories or that have a value that exceeds the limit that can be protected are considered non-exempt.
Exemptions in Minnesota are broad, and they can allow you to protect many of the most significant things you own, including your home, your vehicle, your pets, your retirement, social security, and government support, and, for most people, the majority of your personal possessions. Exemptions operate according to rules set by the state and federal legislature, and each body has created its own set of exemptions that you can choose to use when filing bankruptcy – in speaking with your bankruptcy attorney, they will advise on which set of exemptions works best for you.
The good news is that this means your attorney will be able to tailor your case according to the specific assets that you own and ensure that your assets are protected to the greatest degree possible during your bankruptcy. This means that in some cases, everything you own could be exempt!
While exemptions are broad, certain things may be non-exempt during bankruptcy, which begs the question, “How can I protect non-exempt assets?” This can be accomplished in a few ways, and the method used to protect these non-exempt assets will depend on the type of bankruptcy you file. In a Chapter 7 bankruptcy, non-exempt assets can be protected by paying their current cash value into the bankruptcy, often for a payment plan that your attorney can negotiate on your behalf. In a Chapter 13 bankruptcy, your exempt and non-exempt assets are protected. Still, the total amount of your non-exempt assets will help determine the size of the payments made into the bankruptcy through your Chapter 13 bankruptcy plan.
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For most people, the majority of what you own will be protected during the bankruptcy process. This includes many of the most significant things that you own, including your home, your vehicle, your pets, and your retirement savings. To learn more about the specific ways these assets can be protected, please feel free to reach out to us! We’re here to help, and we’re always happy to answer questions about how bankruptcy can work to help you and your family. When the time is right, or when you are ready, please don’t hesitate to contact Minnesota’s most kind and helpful bankruptcy law firm by going now to www.lifebacklaw.com.
