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Millions of Americans suffer from an insurmountable debt. Many of these people have no idea what they can do to get out of this financial trouble. When asking for help, the terms bankruptcy and debt consolidation often come up. Depending on the amount of the loan the person has at times debt consolidation is also not an option. The only way to get out of large amounts of unsecured debt is to file Chapter 7 bankruptcy. Chapter 7 bankruptcy will wipe out all unsecured debt such as credit cards, medical bills and personal loans. The first thing that comes to people’s mind when they hear the word Chapter 7 bankruptcy is that they are going to lose all their assets. People fear that the bankruptcy trustee will take all their collectibles and family heirlooms to sell them at auction and pay off their debts. While in reality it is more myth than truth.
Most people’s valuables or what they consider to be valuables are only worth something to themselves. Debtors filing bankruptcy think that if they list their collectibles, the trustee will immediately seize them for sale. Many people who file for bankruptcy get a rude awakening when they discover that their prized collectibles are actually not worth as much as they thought they were. Many collections are too difficult to sell to be worth the bankruptcy trustee’s time to try the process. One thing we haven’t even covered is that debtors who file bankruptcy are also protected by a generous amount of exemption laws. Bankruptcy exemptions vary from state to state, but most areas offer generous amounts for personal property. Every debtor has an ace in the hole with a wild-card exemption if you can’t exempt it under one of the various categories. The bottom line is, the Chapter 7 bankruptcy trustee is not interested in selling these types of items.
When filing for bankruptcy, the trustee is responsible for examining the debtor’s assets and collecting any assets that are not exempt. The idea is, the bankruptcy trustee is to sell the non-exempt property and apply the proceeds to the debts. The bankruptcy trustee also needs to consider the costs of administering the case. In many cases, it costs more to assemble and sell the property than it is worth in proceeds. Most bankruptcy trustees will not attempt to sell assets and distribute the proceeds to creditors unless they can make a sufficient amount to cover their costs.
If a person has valuable items such as a gold watch or some expensive antiques and they do not fall within the state’s exemptions, this may warrant a sale of the property by the bankruptcy trustee. This doesn’t happen very often. In general, the bankruptcy trustee does not want to collect and give away the person’s assets. filing for bankruptcy, As long as the property is protected by exemption laws, they don’t want it. Sometimes debtors will be able to do some work with the Chapter 7 trustee to buy back items from the bankruptcy estate, as long as they have the money to do so. And in a Chapter 13 bankruptcy, debtors can keep all their assets if they do some work with creditors and complete a 3- to 5-year payment plan. Depending on the amount of property you own and are considering filing bankruptcy, it is in your best interest to consult with a bankruptcy attorney to ensure that your property is protected to the extent of exemption laws in your area.
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