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Most people worry a great deal about what property they might lose in a bankruptcy and most will learn that they can keep everything they own. The purpose of bankruptcy laws is to provide the honest, unfortunate debtor with a financial fresh start. To give the debtor an effective fresh start, bankruptcy law allows you to keep the property you need to go forward with dignity and a reasonable amount of comfort.
Property protection with bankruptcy. Our Everett bankruptcy lawyers explain what is at risk.
The kinds of property that tend to be vulnerable are usually luxuries – vacation homes, third cars, etc. You may lose a large amount of money, such as very large tax refunds, money people owe you, large awards in lawsuits and rental income, for example.
Can I save my retirement if I file for bankruptcy in Snohomish County?
Retirement accounts are completely protected. If you own a business with a high value, that could be at risk. If you have property that is at risk in a Chapter 7 liquidation, you can keep it in a Chapter 13 as long as you are able to pay your unsecured creditors the same amount they would have received in a Chapter 7.
The property of a typical bankruptcy debtor is completely protected by the “exemptions” in bankruptcy law. There are different exemptions for different kinds of debt. In Washington, you can use either federal or state exemptions. The federal exemptions are usually better for someone without a lot of equity in their home because it allows an $11,975 “wildcard” exemption that can be applied to any property.
Both state and federal exemptions protect approximately $3,500 in your car’s equity (the amount a car is worth minus any loan that still needs to be paid). Both contain generous exemptions for household goods and basic property such as jewelry or tools of the trade. Washington’s homestead exemption protects $125,000 of home equity. Both protect 100% of retirement accounts, public benefits and back child support. There are many kinds of exemptions and it is important to hire an experienced bankruptcy attorney who can advise you on maximizing the amount of property you can protect.
If you are making payments on a house, car or other expensive item, you can usually keep this property in bankruptcy if you can keep paying for it. In a Chapter 7, you may have to sign a “reaffirmation agreement” that takes the debt out of the discharge. Sometimes you can keep the property by simply continuing to make the payments, though a car company can repossess a car if you do not sign a reaffirmation agreement even if you stay current on it. You can pay these loans off in a Chapter 13 plan too. Often you can lower car payments and catch up on mortgage payments in a Chapter 13.
If you transfer property out of your name to an insider, such as a relative or business partner, that person can be sued so the property can be distributed to creditors. The law does not allow you to fraudulently transfer property out of your name to avoid debts. If the bankruptcy judge decides you did this, you lose any exemption you may have had.
An experienced Everett bankruptcy attorney can help – call for your FREE consultation!
Choosing the right exemptions is one of the more complicated aspects of bankruptcy in Snohomish County. Before you start selling important property yourself or transferring it out of your name in a desperate attempt to avoid bankruptcy or debt collectors, you should explore your bankruptcy options with a professional. Contact an Everett bankruptcy attorney from our firm today!
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The Central Building - 1721 Hewitt Ave #521B
Everett, WA 98201
Our debt relief and bankruptcy lawyers serve clients throughout Snohomish County and Western Washington. These cities include, but are not limited to the following localities: Everett, Arlington, Marysville, Edmonds, Brier, Lynnwood, Monroe, Bothell, Lake Stevens, Mukilteo, Mountlake Terrace, and Snohomish. If you live in Snohomish County and have questions about your Washington State bankruptcy and debt relief options, we invite you to call our offices for a free, no obligation initial consultation.