This is the million dollar question that plagues everyone that is filing bankruptcy. Most people are pretty attached to their personal property and have trouble giving anything up. That’s why it’s common for a bankruptcy attorney to hear this as the first question, Will I lose my stuff when filing bankruptcy? A good bankruptcy attorney knows this question seems pretty silly as it was buying all this stuff that put the person in the financial trouble anyways. Not to fret though, the answer is no.
When Congress created bankruptcy, they wanted to truly give a person a fresh start. If the bankruptcy court hauled off all of one’s property, it would be pretty hard for that person to have a fresh start with nothing to get started with. That’s why the bankruptcy exemption laws were born and added to the bankruptcy code. If the person filing bankruptcy lost all their tools and their automobile, they wouldn’t be able to work and would never be able to recover from the bankruptcy filing. The bankruptcy exemption laws were enacted to give an individual a generous amount of property to allow them to get back on their feet. There is even a wild-card exemption that is usually used for personal property like jewelry.
In today’s economy, it’s rare to see the bankruptcy trustee take any property at all, except for property that is easily liquidated. The bankruptcy trustee isn’t in the business to sell at the swap meet every week to only get pennies on the dollar for someone’s property. The trustee will weigh out the costs selling something versus what will be recovered. Nowadays, used property has virtually no value making it a waste of time for the trustee. This is an area that a bankruptcy attorney will earn their keep for their client.
Everyone’s situation is different, but in some cases individuals with a large amount of unsecured debt that filing bankruptcy might be able to afford to keep their car and their home. Eliminating all the credit card debt and personal loans will sometimes allow an individual to just squeak by and be able to make their house payment. Where the big problem will lie is if the individual got months behind on their payment and has no way of coming up with a lump sum to catch up. Once again this is a good reason to hire a bankruptcy attorney to navigate the complexity of the bankruptcy code. Prior to 2005, it was easy for people to file a pro se or do-it-yourself bankruptcy. During this time frame, Congress felt there were too many abusing the bankruptcy system and made changes to the code. In the big scheme of things, a bankruptcy attorney well worth their fees when considering the amount of debt that will be wiped out in the bankruptcy discharge. Since things have become more complex, it’s important to make sure that everything is included so he can’t come back and bite the individual later.