How is a debtor able to retain non-exempt assets?
• File chapter 13. • Compensate the bankruptcy estate in lieu of liquidation. Should a debtor sell or cashout nonexempt assets and purchase exempt assets prior to a bankruptcy? This is a form of exemption planning. Exemption planning is not prohibited per se but problems can arise. Should a debtor seek to protect nonexempt property by transferring it to friends or relations prior to the bankruptcy? No. What options exist with regards to secured property in a chapter 7 case? • Reaffirm the obligation with the secured creditor [both the debtor and creditor must agree to the reaffirmation]. • Surrender the collateral. • Retain and keep current with creditor [a secured creditor with personal property for collateral may still be permitted to repossess the property should the debtor not reaffirm]. • Redeem the property by paying the creditor the value of the collateral [only available with tangible personal property used for personal, family or household use].
