Chapter 7 Bankruptcy Question Answered: No, You Won’t Lose Everything

Having more bills than money at the end of the month can be stressful. However, if this continues for months or years at a time, struggling to keep your head above water financially can cause anxiety, depression, and a wide range of other issues. Chapter 7 bankruptcy in Los Angeles can relieve many financial problems and enable you to move forward. The Law Office of Terrence Fantauzzi helps clients from Los Angeles to Riverside address their financial issues, rebuild credit, and live the life they always wanted.

The Bankruptcy Estate

Many people wait too long to file bankruptcy because they’re afraid of losing everything. Although Chapter 7 is called “liquidation bankruptcy,” it’s also known as “fresh start” bankruptcy for a reason. You don’t lose all of your property when you file Chapter 7. Bankruptcy requires that you relinquish ownership of your assets. It becomes part of the bankruptcy estate, and the trustee assigned to your case can sell the property on behalf of your creditors.

However, the law recognizes that you are allowed to keep some property as “exempt from judgment”. In the vast majority of cases, you can protect all of your property; including your house and vehicles.

Property List

At the beginning of the process, all of your property, without exception, is part of the bankruptcy estate. The bankruptcy paperwork includes listing all of your property on form Schedule A/B: Property. This is where you list everything you own, including:

  • Business-related property Any property associated with your business, such as retail merchandise, accounts receivable, and goodwill value.
  • Financial assets –Bank, retirement, and stock account balances, tax refunds, legal claims, business, and other monetary interests
  • Personal items –Jewelry, furniture, clothes, electronics, collectibles, firearms
  • Real estate –Your home, any land or building
  • Vehicles –Cars, trucks, vans, ATVs, boats, motorhomes, SUVs, motorcycles, aircraft

You must include the value of each asset. You’ll use the retail replacement value for most household and personal items and fair market value for your home and other real estate and real property.

Bankruptcy Exemptions

In addition to Schedule A/B, you must also complete Schedule C: The Property You Claim as Exempt. If you don’t list the items you want to keep, the court trustee will sell them and distribute the proceeds to your creditors. Each state has its own list of exemptions, so if you filed for bankruptcy in another state, make sure you understand your allowance in California. The court allows a broad range of exemptions, such as:

  • House
  • Car
  • Clothing
  • Home goods/furnishing
  • Equipment necessary for your job
  • Most retirement accounts

California has two exemption schedules. Each schedule has its own list of exemptions, and you must choose the one that fits your situation best.

Call Us Today to Learn More

We understand that making these decisions is challenging. Bankruptcy laws and requirements are complex and can add to the stress of filing. Contact us today and schedule a free initial consultation. Let’s sit down and discuss your situation and talk about your options. If you decide to move forward, we can take care of the paperwork and help you make the best choice for your life.

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