Oftentimes when we hear the word “bankruptcy”, our minds conjure up this image of losing money, being broke, selling all our properties, and having some valuables from our homes seized by creditors. Nobody wants to be in this kind of situation as it is seen as a financial tragedy. However, there is always room for light in all of this. We should view bankruptcy through positive lens as a fresh start, a means for change, and a chance to get back on our feet.
How are your properties affected in a bankruptcy filing?. There is nonexempt property in bankruptcy and there is exempt property. Everything is pretty much self-explanatory as exempt properties in bankruptcy are items that you have declared as exempted and considered untouchable during the bankruptcy proceedings. Nonexempt property, on the other hand, is the opposite. These are the properties that will be disposed off to pay off your debts.
Dealing with bankruptcy doesn’t have to be a losing game. Understanding the procedures can help you get your life back on track. Bankruptcy can be a chance for you to reevaluate your life and start anew. Making the distinction between properties to keep and properties to sell can help make facing bankruptcy easier.
If you’re facing bankruptcy issues, know that you don’t have to go through it alone. Enlist the help of a Portland, Oregon bankruptcy attorney to help you through every step of the way. While the entire bankruptcy process may be complicated, an attorney’s legal expertise can be your guiding light to achieving the desired outcome.
Exempt Property vs. Nonexempt Property in Bankruptcy
Differentiating the two kinds of property you’ll be dealing with in bankruptcy is the first step. As previously mentioned, there is exempt and nonexempt property in bankruptcy. Exemptions have quite a role in both chapter 7 and chapter 13 bankruptcies. Exemptions determine which property you keep or which property you’ll pay to your creditors, depending on the type of bankruptcy you file.
Exemptions help you determine what assets you’ll be keeping in a bankruptcy. These assets are usually on the essential side, such as cars, clothing, tools you need for work, and retirement accounts. In short, these are things that you’ll need to continue surviving, basic necessities to say the least. Exemptions are geared towards protecting property up to a certain dollar value. Depending on the state you’re in, examples of other items that can be exempted are jewelry, pets, and collectibles.
Nonexempt property, on the other hand, is property that isn’t declared or protected in a bankruptcy. These are the items that will be sold, proceeds of which will be used to help you rebuild your life by paying for living expenses. There is a list of exempted property, depending on your state, and nonexempt properties are those that don’t reflect on the list.
Get in touch with a bankruptcy lawyer whenever faced with bankruptcy terms. A seasoned bankruptcy lawyer can explain the situation in terms that you can easily understand.
Nonexempt Property in Chapter 7 Bankruptcies
Most individuals file for chapter 7 bankruptcy since it is quicker and a lot simpler to file. Chapter 7 bankruptcy requires no debt to pay back and one becomes eligible for this if their gross income is lower than the state’s median income. An individual can also file for this if they don’t have a bankruptcy discharge in the last six to eight years. The entire process of filing this kind of bankruptcy takes about four to six months.
Chapter 7 bankruptcy has an ‘automatic stay” system which prevents creditors from any collection activities.
Nonexempt property in bankruptcy of this kind will be sold to the trustee to earn money. The proceeds should help the debtor pay for their living expenses, with priority debts usually paid out first. Priority debts include taxes and child support.
For exempt property in chapter 7 bankruptcy, these would usually depend on the type of property you have and how much it is worth. In a chapter 7 bankruptcy, your creditors cannot sell these to pay your creditors and how much you get to keep depends on asset value and claimed exemptions. Typically, most filers keep almost all their properties in chapter 7 bankruptcies.
Consult with a Portland, Oregon bankruptcy attorney to help straighten out any confusion and doubt you may have regarding chapter 7 bankruptcies. Determine what kinds of property can and cannot be exempted. Knowing important terms is the first step to getting your life back on track.
Nonexempt Property in Chapter 13 Bankruptcy
Individuals who have a significant amount of income would benefit from filing for chapter 13 bankruptcy in order to protect their assets. In order to become eligible for chapter 13 bankruptcy, the filer must not have a high debt for both secure and unsecured types. Filers with debts that are too high would be asked to file for chapter 11 bankruptcy instead. Individuals with a high and steady income but aren’t business owners are recommended to file for chapter 13 bankruptcy.
Nonexempt property in bankruptcy of this sort means that the trustees won’t sell all your properties but you would have to pay an amount that is equal to the properties you’ve exempted.
Chapter 13 bankruptcy has a repayment plan whose amount depends on your income, monthly living expenses, property owned, and amount of debt. You first have to determine your disposable income followed by the nonexempt asset value and pay this amount to your creditors in the repayment plan. The final step is determining which debts to pay off including mortgages and car payments.
If you don’t have that many nonexempt properties in bankruptcy, you might find drafting a confirmable plan easy. You can consult an experienced bankruptcy lawyer regarding chapter 7 and 13 bankruptcies so you can get more information.
Seek Legal Help
Figuring out bankruptcy terms can be quite complicated for anyone who isn’t well-versed in this area. When dealing with bankruptcy and other financial struggles, enlist the help of Michael D. O’Brien & Associates, P.C., by contacting (503) 694-4445. The chapter 7 and chapter 13 bankruptcy lawyers can walk you through the entire process and help you come out of bankruptcy on the way to regain control over your life. Schedule an appointment with Michael D. O’Brien & Associates, P.C., now.
