Deciding to file for bankruptcy is probably the most stressful financial decision you will ever make. It should also be your very last option. Before you consider filing for bankruptcy, you should contact your debtors to see if an affordable payment plan can be reached. Also, consider debt consolidation. If you are considering bankruptcy in Miami, only a Bankruptcy lawyer in Miami can tell you exactly what will happen to your assets for your specific case. The information provided here is a generalization of what you can expect if you file Chapter 7 or Chapter 13 bankruptcy. Keep in mind that bankruptcy laws are different for each state.
Chapter 7
Chapter 7 bankruptcy is a liquidation bankruptcy. Any eligible assets will be sold and the profits from the sales will go to pay off your bankruptcy debt. In most cases you will be permitted to keep the following items
- Primary Automobiles under a certain cost
- Tools that you need to continue working. For example, if you are a carpenter you will keep tools you need for you trade. If you are a computer programmer your computer will be exempt.
- Jewelry.
- Furniture and personal items that are reasonably priced.
- Retirement accounts.
It is important to understand that filing for Chapter 7 does not mean that the bankruptcy court is going to come in and sell off everything that you own to pay your debt. It does not work that way in the United States as a whole. Some of your assets can be liquidated. Here are a few examples of assets you can expect to lose when you file for Chapter 7.
- Second or third cars that are worth more than you owe on them.
- Recreational vehicles such as campers, ATVs and dirt bikes.
- Non residential properties. This will depend on your situation, if you are looking at foreclosure in Miami or if you cannot afford to pay your house payments, you could be at risk of losing your primary residence home as well.
- Stocks and bonds. You may also be required to forfeit savings accounts. Your 401k retirement accounts will be protected.
- Coin collection, expensive art and other collectibles of value. This may include family heirlooms if they have a high monetary value.
Chapter 13
Chapter 13 bankruptcy is a restructure and repayment bankruptcy. This means that instead of liquidating your assets and using the profits to pay off your debt like in Chapter 7, you will keep your all of your assets but you will make payments over a three to five year term. This means in Chapter 13, you will lose none of your assets due to bankruptcy. If you make your payment on time each month, at the end of your payment period the remaining debt will be discharged and you will walk away debt free while keeping your assets. Chapter 13 is also less damaging to your credit than Chapter 7 bankruptcy.