Can I use bankruptcy to protect my assets?
Bankruptcy can protect your assets in several ways. In a Chapter 7 (liquidation) case, the trustee will take all your non-exempt assets for the benefit of your creditors. But sometimes you can convert nonexempt assets into exempt ones prior to filing. Exemption planning requires advice from a local attorney because rules vary between states and even between judges within a single state. If a judgment creditor (someone who has won a lawsuit against you) obtains a lien on your property, and if that lien impairs an exemption to which you’re entitled under the Bankruptcy Code, you can “avoid” that lien. Avoiding the lien wipes it out, which prevents the lien holder from seizing your property and selling it to satisfy your debt. Some states have homestead laws that protect you only from subsequent creditors. In those states, a bankruptcy filing will probably allow you to use the state homestead exemption against all your creditors, even if you file the homestead the day before the bankruptc
Although bankruptcy is not necessarily a desirable course of action, it has lost much of its traditional stigma, and is now sometimes used as an asset protection device. By filing a bankruptcy petition, you can stop all action being taken by your creditors. However, the timing is crucial when filing a bankruptcy petition, especially if you want to protect certain assets. Although you may want to quickly stop creditor harassment, be aware that a hastily filed petition may work to your detriment. Knowing how bankruptcy works can be extremely useful in protecting your assets. Prior planning is essential before a petition is filed. Any transfer of assets made within 90 days of filing a bankruptcy petition may be voidable, and thus subject to the claims of creditors. You should make any transfers, and then hold off filing the petition for the requisite 90 days, thus preventing the property from being recaptured in the bankruptcy estate. It is important to note that transfers made to “inside
Bankruptcy can protect your assets in several ways. In a Chapter 7 (liquidation) case, the trustee will take all your non-exempt assets for the benefit of your creditors. But sometimes you can convert nonexempt assets into exempt ones prior to filing. Exemption planning requires advice from a local attorney because rules vary between states and even between judges within a single state. If a judgment creditor (someone who has won a lawsuit against you) obtains a lien on your property, and if that lien impairs an exemption to which youre entitled under the Bankruptcy Code, you can avoid that lien. Avoiding the lien wipes it out, which prevents the lien holder from seizing your property and selling it to satisfy your debt. Some states have homestead laws that protect you only from subsequent creditors. In those states, a bankruptcy filing will probably allow you to use the state homestead exemption against all your creditors, even if you file the homestead the day before the bankruptcy.
