When declaring bankruptcy what can I do to protect my personal property?

Under bankruptcy law, you have the right to file for bankruptcy. However, if you own assets that are above and beyond what is considered necessary, the bankruptcy trustee, who works for the court, has the right to take possession of these items and to sell them. The funds from such a sale are used to repay creditors. In most cases, there are ways to protect most types of personal property. The key is to know your options. Working with an attorney can help.

Protecting Assets

To protect assets, consider your state’s bankruptcy law. The state’s laws outline specific bankruptcy exemptions, which are types of property protected by the state from creditor claims against it. These laws usually list the type of property as well as the value of that property to determine if it is protected.

• Bankruptcy exemptions can protect some types of personal property up to a certain value. This includes household items, furnishings, clothing, and in some cases your vehicle.
• Some states have a wild card exemption. This is a set value that may be applied to any type of property not otherwise exempt.
• Some states allow property owners to apply unused homestead exemption value to other types of personal property.

It is also important to note that the bankruptcy trustee is unlikely to seize property unless it is valuable enough to sell at a high enough value to make it worthwhile to do so. For example, if you own a vehicle worth $3000 but owe $2500 on it, it is unlikely that the bankruptcy trustee will take possession due to the fact that it may be hard to turn a profit on this sale.