With a large number of people having financial trouble, searches on the Internet about filing bankruptcy continues to rise. When it comes to personal bankruptcy there are two basic types that people need to interest themselves in. The most popular type is Chapter 7, because it wipes out all unsecured debts with a minimal loss of property. The other one is Chapter 13, which is beneficial when an individual is trying to protect secured assets. A Chapter 13 bankruptcy will allow an individual to catch up over a 3 to 5 year time frame. Most individuals would like to file Chapter 7 but worry about having property liquidated by the bankruptcy trustee. Each state, along with the federal government, has bankruptcy exemption laws that allow a debtor to protect a certain amount of property. This is where a bankruptcy attorney will shine. A local bankruptcy attorney should know all the exemption laws for the District that they file in. This can be very beneficial to the debtor as the attorney will know how to protect the individual's assets to the maximum. You must reside in a state for 180 days to file bankruptcy there, and to use the exemption laws you have to have two years residency. You can still file bankruptcy but you will have to use the federal exemption laws or the exemption laws from the state that you moved from.
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Having a local bankruptcy attorney can be beneficial in helping a client hang onto as much property as the law will allow. Attorneys are very familiar with the exemption laws and understand what is acceptable by the court. With all the people filing chapter 7 nowadays, many are surprised to hear that they are not going to lose everything they own. In most situations, the court is not even interested in equity on a secured piece of property that is financed. Unless it's a large amount that could be liquidated easily, it wouldn't be worth the time to force the sale. The bankruptcy filer has a choice to use the federal exemptions or the state exemptions, whichever is more beneficial to them.
When it comes to the bankruptcy law, every state has it's own exemptions, sometimes with no rhyme or reason. Most states protect life insurance and retirement pensions with large balances. This helps those that are near retirement because it would be impossible for an individual of this age to survive if their pension got liquidated to pay creditors. Most states have liberal exemption amounts for an automobile, household goods, and tools of the trade. The bankruptcy courts understand that most people would be unable to work if you took away their vehicle and tools they need to work. Other exemptions include jewelry and a wild card exemption which varies from state to state. A lot of times the bankruptcy attorney will use all the necessary exemptions for personal items and put the excess into the wild card exemption category. In most cases, the bankruptcy trustee does not want to pick up a truckload of old sofas and refrigerators and liquidate them at a flea market. The time involved to turn these kinds of property to cash is counterproductive. Items that the court might be interested in are antiques, valuable collectibles and expensive jewelry. If these kinds of items are not protected under an exemption law there is a good chance the bankruptcy trustee might want to pick them up for liquidation. Once again, it depends on the overall values of these items. If the debtor has $100,000 in debt and has $2000 of property that is unprotected to be sold, the recovery amount from the sale of the items for the creditors is very minimal and might not be worth the bankruptcy trustee's time. This is once again an example of the importance of having a bankruptcy attorney representing you to protect your property.
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