5 Questions To Decide What To Keep In Bankruptcy
Downriver bankruptcy clients are often concerned with what assets they can and should keep when filing for Chapter 7 bankruptcy. So many assets have more than monetary value but can also mean a lot when it comes time to liquidate. Always consult a downriver bankruptcy attorney, but also ask yourself the following 5 questions.
Are You Current on the Debt?
In Chapter 7 bankruptcy, you might be able to reaffirm certain secured loans, such as your primary home mortgage, or even your car loan. However, in order to reaffirm these loans, you must be current in most cases.
Most Downriver bankruptcy cases see debtors that are behind on payments on their home, auto, or other loans. This means that reaffirmation of the debt is off the table, and it would be wise to focus on protecting other assets.
What Exemptions Will You Choose?
Federal bankruptcy exemptions and Michigan bankruptcy exemptions differ greatly. Understanding these rules can help you know what assets are safe or easy to protect, and which ones are not.
For example, Michigan exemption rules allow you to exempt up to $3,725 in equity on one vehicle. However, if the equity is less than this, you cannot sell the car to help pay off debt. If, however, your equity is higher, then it might make sense to take the federal exemption of $4,000 and then take a wildcard exemption to protect $1,325 more in equity.
Can You Really Pay Your Debt in Full?
Before reaffirming any debt, analyze whether you can honestly afford to keep it for the long term. An individual who filed Chapter 7 bankruptcy must wait eight years before filing Chapter 7 again. So if you reaffirm a five-year auto loan, you can’t get bankruptcy protection from it again. Therefore, you do well to seriously assess how it will impact your finances for the duration and what may happen if your income changes.
If you have questions about your prospects for repayment, you’ll want to ask your Downriver bankruptcy lawyer to give you an honest assessment of what they think about your decisions.
What Sacrifices Can You Make?
If you reaffirm a mortgage or car loan, or use exemptions, you have decided to tie up funds that could be used for other assets. So you’ll need to ask some hard questions about whether keeping your home or car are worthwhile, knowing that you may have to forgo other expenses.
In Chapter 7, you have a wildcard exemption, which can be used for anything. So it might be more important to you to protect more of your home equity than it is to protect a valuable dish set from your grandparents. Or you may want to use it to protect some fine jewelry left to you by your mother.
Where Can You Get Help?
Deciding what to keep and what to do away with can not only impact your finances, but it can also affect personal relationships. This is where consulting a Downriver bankruptcy specialist is most helpful.
The Mitten Law Firm is here to help you navigate asset protection and every other facet of your Chapter 7 bankruptcy. Contact us today for a free and confidential consultation.
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