One thing that worries people when it comes to bankruptcy is what will happen to their assets. After all, bankruptcy is supposed to give an individual a fresh start financially, and it isn't going to be helpful to lose all of your valued possessions. It is one thing for your credit to be damaged in the next several years which will undoubtedly happen once you declare bankruptcy. It is quite another thing to have to give up your home or car to help pay off your debts.
In order to understand what you get to keep during the bankruptcy process, it's important to understand some of the reasoning behind it. When you file Chapter 7 bankruptcy, you are asking the court to discharge your debt, which means that it would be done away with so you wouldn't have to worry about it ever again. Of course, you took on these steps voluntarily and, in order to give your creditors at least part of the money, you'll have to liquidate your assets to help pay for your debts.
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This sounds quite reasonable when you factor in your financial obligations, but it can be scary if you think you're going to lose a lot of your possessions. The truth, however, is that most people who declare bankruptcy don't have much in the way of valuable assets anyway. Generally speaking, you will have certain allowances for household items. So, for example, if your household furniture doesn't comprise luxury items worth tens of thousands of dollars, then there's a good chance you won't have to liquidate them.
As far as your house goes, there's a good chance that it will be covered by your state's homestead exemption laws, but the details do vary significantly from state to state. For example, in some cases you may be forced to sell your house and use the equity to pay off your debts. States like Texas and Florida have unlimited homestead exemption, so you would get to keep your house even if it's worth hundreds of thousands of dollars.
This is why it is so important to discuss the details of the case with a bankruptcy lawyer, because your specific circumstances and your state's laws will determine much of what you would get to keep if you chose personal bankruptcy. It is crucial to learn as much as possible before trying to make your decision, and the last thing you want to do is make a hasty move regarding your financial future.
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