Many people who are considering filing bankruptcy are concerned about losing important property such as their home of the vehicle. After all, the fundamental premise behind Chapter 7 bankruptcy1 is the liquidation of a debtor’s assets and using the proceeds to pay off his or her debts. Fortunately, there are many ways that a bankruptcy attorney can help people keep their assets while still taking advantage of the benefits of filing.
Anyone who is experiencing financial problems should discuss their options with an experienced bankruptcy lawyer as soon as possible. Call a Long Island bankruptcy lawyer at The Law Office of Ronald D. Weiss, P.C. at 631.271.3737 today to schedule a free consultation.
Keeping Assets in a Chapter 7 Bankruptcy
The most common legal mechanism through which people who file for Chapter 7 bankruptcy keep assets is by taking advantage of the various exemptions authorized by law. Types of property that may be exempt include your equity in your home, vehicles, clothing, jewelry, or work tools. Non-exempt property will be liquidated in order to satisfy underlying debt, and the amount of debt left unsatisfied is discharged.
People who wish to keep secured property that does not qualify under an exemption have the option of reaffirming the debt. Debt reaffirmation is basically an agreement with a specific creditor to not include the debt in the filer’s bankruptcy. As a result, the debtor can keep the property and the creditor continues to receive payments. In many cases, debt reaffirmation is a good opportunity to negotiate with creditors, potentially resulting in lower monthly payments.
Reaffirming a debt is not always a good idea. In addition, there are some cases in which a court2 may not allow a debtor to enter into a reaffirmation agreement. Consequently, it is important for people who are considering bankruptcy and reaffirmation to discuss their options with a Long Island bankruptcy lawyer. Your attorney will thoroughly review your financial circumstances and advise you on your best course of action. In addition, a phone call from an attorney to a creditor can often result in a stronger negotiating position than if you call yourself. When creditors are aware that a debtor is considering bankruptcy, they often will offer much better repayment terms in the hope to recover something rather than nothing.