What Assets Are Protected When Filing For Bankruptcy?
Filing for bankruptcy is a stressful process felt by more than 1.5 million individuals every year, often at the end of a long, difficult period of trying to reduce debt levels to a manageable amount. In most cases, many of the assets held by the person declaring bankruptcy will be taken by the trustee and sold to pay off creditors, but there are some assets that are protected when filing for bankruptcy. The exact assets protected from seizure will vary depending on the state that you live in, but here are the assets that are protected in most areas.
Primary Residence
The decision of whether you will be able to keep your primary residence after bankruptcy will depend on a number of factors, including the size of the property, the amount owed on the home, and the state that the person lives in. In some states, the amount of land around the home that can also be kept is specified in the bankruptcy rules and anything above that amount will be sold to pay off creditors. It is important to read the bankruptcy rules for your particular state to find out whether or not you will be able to keep your home after declaring bankruptcy.
Tax Exempt Retirement Fund
The money that has been placed in a tax exempt retirement fund is legally protected from seizure to pay off creditors in a bankruptcy. In most states, 401K’s, employer sponsored retirement plans, and individual retirement plans cannot be taken in bankruptcy court. Some states cap the amount that is protected in an IRA at $1.17 million per person, with amounts above that seized to pay creditors.
Vehicle
Your primary vehicle may be protected from seizure if it meets certain criteria under the bankruptcy laws in your state. Vehicles where the owner owes more than the value of the vehicle on the loan can generally be kept as long as the payments remain current. Some states have an exemption limit for bankruptcy filings and vehicles that are paid off whose value is lower than this threshold may be kept. Valuable vehicles that are paid off may be seized and sold to pay creditors.
- Debt Free For Life: David Bach on Bankruptcy A publicist for David Bach reached out to me last month to ask if I would be interested in reviewing his new book: Debt Free For Life. Usually, I pass. Reading a book and writing a quality review takes a dozens of hours for me. This request was different for......
- Protect Your Spouse in Your Financial Plan from Claims of Creditors In Marital Money Matters, It Really Helps if You Work Together I read lots of posts, messages, and comments on financial planning blogs and forums in which one spouse complains that the other has various money maladies, from being a tightwad to a spendthrift. Naturally, the inclination of the complaining......
- Should Online Merchants Have to Pay Sales Taxes? It's pretty apparently that both our federal and state governments need more money, and one hot issue that I've been hearing a lot about lately is the discussion on whether to allow states to tax internet purchases and collect some much needed money. Why is this such a big deal?......
- Important Aspects You Must Know About Bankruptcy Laws Guest Post: The writer of this article is Wystan North.He has made his mark by writing on legal issues especially on filing bankruptcy procedures in different states. The author regularly writes on bankruptcy related issues like Ohio bankruptcy,filing bankruptcy In Ohio, chapter 13 bankruptcy and chapter 7 bankruptcy etc.......
- Can You Retire On Less Than $3,000 A Month? Ever wondered if you could retire on $3,000 a month? Well the answer is "Yes!". Not only that, you might be able to get by on only $2,000 a month! Of course, you'd have to sell you gas-guzzling Tahoe and move -out from your swanky Downtown condo and move somewhere......
