This is probably the single biggest question we get asked at Kain & Scott. What assets will I lose if I file Chapter 7 Bankruptcy? The answer simply put, is in the vast majority of cases filed, most debtors lose no assets at all.
We can protect a lot of assets in a Chapter 7 Bankruptcy. If your assets are protected we call that “exempt” assets. If your assets are not protected, and the Chapter 7 trustee can take and liquidate your assets, we call those assets “non-exempt”.
The vast majority of Chapter 7 debtors have only “exempt” assets. This means there is nothing for the trustee to sell and use the proceeds to pay down your debt. Some debtors do have non-exempt assets the trustee must liquidate and use the proceeds to pay down your debt. Whatever debt doesn’t get paid off, gets discharged (wiped out) tax free, under Section 727 of the US Bankruptcy Code.
Normally, a debtor’s home, vehicle, clothing, household goods, and pensions are all protected. However, if you own a condo in Florida worth 100k and you own it free and clear, we would not be able to protect the condo. The trustee would sell the condo and pay down your debt. That same person might be owed 100k from a lawsuit they won against a former boss. We would not likely be able to protect that either.
Everyone’s case is unique- no two cases are the same. As stated above, the vast majority of guests lose no assets. Of the cases where there are non-exempt assets my guess is the vast majority of those cases have 5k or less in non-exempt assets. If you are losing 100k in credit card debt, paying 5k for non-exempt assets would be a steal!
When the time is right, or when you are ready, reach out to Minnesota’s highest google reviewed bankruptcy law firm at www.kainscott.com. You will be glad you did!