One of the biggest myths that many people associate with filing for bankruptcy is that the process will strip filers of all of their possessions. Simply put, that isn't true. Most people who file for Chapter 7 bankruptcy - commonly known as "liquidation" bankruptcy - will actually get to keep most of their possessions. Our readers may be thinking, how is this possible? The answer - bankruptcy exemptions.
When Escondido residents file for bankruptcy, they must provide a list of all of their assets to the bankruptcy court, as well as a list of all debts owed. In Chapter 7 bankruptcy, the bankruptcy trustee then proceeds to liquidate the filer's assets and use the funds garnered from the sale of those assets to pay back debts owed. But, the law provides that filers are entitled to bankruptcy exemptions to protect certain assets.
For instance, many of a person's personal items will not be subject to liquidation, such as clothing and perhaps even a vehicle. And, for those who have equity in their home, there may be an opportunity to keep the home, depending on whether or not such a move would be in the filer's best financial interest. Further, any "tools of the trade" that a person needs in order to earn an income can be exempt from a bankruptcy filing.
Knowing what assets an Escondido resident can keep when filing for bankruptcy is perhaps the most complicated part of the process. There are certain maximum values involved in many cases. At our law firm, we do our best to work with our clients in order to determine what assets will be exempt in each bankruptcy filing. For more information, please visit the assets and exemptions section of our law firm's website.