How Asset Protection Works In A Bankruptcy
Posted on: 1 October 2015
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If you have to file for a bankruptcy, you don't have to worry about losing everything that you ever owned. While it is important for creditors to recoup the money owed them, it is not necessary for a debtor's life to be ruined in order to recoup losses. One way of protecting your belongings is to place belongings under protection.
How to Protect Assets
Even debtors have rights and among these are the right to continue making a living after filing for bankruptcy. For example, if you have a car that you use to get to and from work, or that you use as part of your job, then you can have the car protected so that it does not become one of the items that get sold off to pay your debts. While a judge will not allow any items to be sold which you have legitimately placed under protection, if you abuse the power to protect, it can cost you.
Be Timely when Protecting Assets
There is a right way to go about protecting assets, which is to place the asset under protection before you file for bankruptcy and to make sure that you have a legitimate reason to protect it. Thus, you need to be thorough when you file for protection. If something comes up that you forgot to claim, and you try to change your paperwork to include the item, you can be charged with filing a fraudulent claim.
Don't Overextend Your Reach
The fact that you really like something is not a reason to protect it. You might be tempted to protect a TV, a baseball card, a favorite set of golf clubs, etc., but while these items might be important in protecting your quality of life, they are not necessary to make a living and could actually help creditors to recoup their losses. Overextending your reach can give a judge reason to deny your claim, or even charge you with fraud.
When you are looking for ways to protect your assets, remember that bankruptcy law limits you to the ability to protect assets which you actually need to make money. While it can be stressful to go through a bankruptcy proceeding and watch your belongings sold off one by one to pay of debts, you need to keep your eye on your goal: ridding yourself of debts, and make sure you play by the rules. If you aren't sure exactly what the rules are, make sure you work with a bankruptcy lawyer.