Top 15 Lies About Bankruptcy. Lie #3: If You File for Bankruptcy, You’ll Lose Everything You Have

25 Feb Top 15 Lies About Bankruptcy. Lie #3: If You File for Bankruptcy, You’ll Lose Everything You Have

Top 15 Lies About Bankruptcy

Lie #3:If You File for Bankruptcy, You’ll Lose Everything You Have.

Truth-o-Meter:

In the vast majority of cases, nothing could be further from the truth. The fact is that most people who file bankruptcy don’t lose anything except their debts.

First, while laws vary from state to state, every state has exemptions that protect certain kinds of property. Using Maryland as an example, there are specific exemptions to protect such things as your household goods and furnishings, the cash value in life insurance and personal injury claims. There is even a “wildcard” exemption of $11,000 per person that can be applied to whatever you want. Most states even have “homestead exemptions,” which protect some or all of the equity in your home. Some allow you to exempt jewelry, guns, family Bibles, tools, etc. Federal law fully exempts your 401(k), IRA and other pension plans: neither creditors (except possibly the IRS) nor the bankruptcy trustee can touch them.

In those rarer situations where you have more property than can be protected by available exemptions, there are Chapters 11, 12 and 13. In these chapters, you keep everything you have in exchange for paying your creditors some or all of what they are owed. Even in Chapter 7, however, over 95% of all cases are “no asset,” meaning that the debtor keeps everything and no distributions are made to creditors.

Filing bankruptcy does not generally wipe out liens. Therefore, if you want to keep a car, truck, home or business equipment that is collateral for a loan, you need to keep your payments current. If the payments are current and there’s no equity (or you can exempt the equity), you can rest assured you will be able to keep these items.But if your home is underwater, or your car is worth less than you owe on it, the bankruptcy trustee won’t want to sell it, because it won’t being in any money to distribute to your creditors.

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Brett Weiss, a senior partner at Chung & Press, LLC, represents people and businesses in all phases of bankruptcy. He has experience in complex individual Chapter 7, Chapter 11 and Chapter 13 bankruptcy cases, and in Chapter 11 small business restructuring and reorganization. Mr. Weiss lectures nationally on bankruptcy issues. He has testified before the Federal Bankruptcy Rules Committee, the Consumer Financial Protection Bureau, and has twice testified before Congress on bankruptcy and credit issues. Brett Weiss is the co-author of Chapter 11 for Individual Debtors, and has written Not Dead Yet: Bankruptcy After BAPCPA, for the Maryland Bar Journal, as well as hundreds of blogs for the Bankruptcy Law Network. With his law partner, he recorded a 13-hour basic bankruptcy training series, and leads intensive three-day Chapter 11 training boot camps. Mr. Weiss has received international media attention in connection with his work. He was interviewed by Barbara Walters on The View, has appeared on the Today Show, Good Morning America, ABC News with Peter Jennings, the Montel Williams Show, National Public Radio, AARP-TV, the BBC World Service, German state television, and numerous local radio and television programs, and been quoted in Money magazine, The Washington Post and The Baltimore Sun, among others. Brett Weiss is the Maryland State Chair for the National Association of Consumer Bankruptcy Attorneys, a founding member of the Bankruptcy Law Network, on the board of the Maryland State Bar Consumer Bankruptcy Council, and a member of the American Bankruptcy Institute, the Bankruptcy Bar Association of Maryland, and the Civil Justice Network. He has been recognized as a “Super Lawyer” every year since 2007 for Maryland and the District of Columbia, and in 2011 received the Distinguished Service Award from the National Association of Consumer Bankruptcy Attorneys for his work on behalf of consumers across the country. Mr. Weiss is admitted to practice before Maryland and District of Columbia federal and state courts, the United States Courts of Appeals for the DC, Fourth and Eighth Circuits, The United States Tax Court, and the Supreme Court of the United States, and has been practicing law since 1983.
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