Generally speaking, by the time someone is considering bankruptcy, their assets are already under threat. There are a number of moves that a creditor can take, including placing a lien on your property or garnishing your wages. It becomes more difficult to deal with the creditor after they have begun recollecting the debt. In most cases, a lien will automatically be placed on any real estate owned by the defendant. One way to avoid this is bankruptcy. However, whether or not it is “financially worth it” all boils down to math. The debt will not go away without bankruptcy or repayment, so financially, you have to save more in bankruptcy than you would if you repaid the debt. 

Protecting Assets in Bankruptcy

For those who are not aware, Chapter 7 bankruptcy is the only form of bankruptcy in which creditors are repaid against the debtor’s assets. In the vast majority of cases, the debtor lacks any assets that can be accessed by the creditor, and the debts are simply discharged. In cases where some assets are exposed to creditors, those assets can be protected using Florida’s Chapter 7 bankruptcy exemptions. Alternatively, you are not expected to liquidate property in a Chapter 13 bankruptcy, so that option remains available to those who can make monthly repayments to creditors.

If Chapter 7 is the only option, you can protect some, but not all, of your property. Florida allows homeowners to protect an unlimited about of equity in their home so long as they purchased it within the past 1,215 days. However, if you use the homestead exemption, it will mean that you can only protect $1,000 in personal property as opposed to $4,000. Additionally, other types of savings can be protected, such as college funds for children, tax credits, and more. Lastly, you can protect $1,000 in equity for a personal vehicle. You can protect up to $750 a week in wages.

Other Ways of Protecting Assets in Bankruptcy

There are no other ways to protect assets from bankruptcy other than the legally ascribed ones. In cases where bankruptcy filers attempt to shift assets out of their estate, the bankruptcy trustee either voids the transaction, charges them with bankruptcy fraud, or both. 

The Bottom Line

If bankruptcy is on the horizon and you’re facing creditor lawsuits, a consultation with a bankruptcy attorney can give you the information you need to make a confident choice. Ultimately, the value of the bankruptcy has to be greater than the cost of repaying the debts, and in many cases, that ends up being the case. 

During your consultation, your attorney will sit down, look over your financials, and discuss the likely best course of action to financially stabilize yourself. Call Chris Arrington today, and we can begin discussing your next moves immediately.