Filing for bankruptcy is important to getting your life back on track. However you ended up in this position, the fact is that there are assets that you need to be able to hold onto so that you are not entirely starting over with nothing. There are also things that you want to be able to keep that have financial value but are important to you for other reasons. Bankruptcy has a mechanism for protecting assets.
Why Do I Need Asset Protection?
In bankruptcy, all of your assets are evaluated for their value. Given the situation, these assets are used to pay off your debts as best as possible.
Your assets include anything that you own of monetary value. The most notable are your house and your car, as well as any investments you have. Asset protection is in place to protect certain assets so that you don’t lose everything. Imagine having to sell your house to pay off your debts. Where would your family live? You could, effectively, be homeless, which isn’t a situation where most people can start over and not end up back in debt.
What if you have to sell your car? How will you get to work or the grocery store? Life becomes very hard without a car, which could lead you back into another debt problem or stop you from being productive.
The courts recognized this and put protections in place for certain assets so that you won’t lose everything and have nowhere to start over.
Which Assets Are Protected in Bankruptcy?
In bankruptcy, there are protections for several classes of assets. The most notable of which are your house and your primary vehicle. Your home is protected in most cases, except when the value of that house far exceeds your ability to afford it after the divorce. Then, you may be obligated to sell it and buy a more affordable house, especially if that sale can pay for your debts several times over.
Your primary vehicle can also be protected. The only caveat is that that vehicle has to be under 15,000 lbs and not be used for work purposes. If your primary vehicle is a personal vehicle and not a work vehicle, it should be protected during bankruptcy.
What About My Other Assets?
Your house and car are not the only assets that are protected. Other assets up to a specific value can be exempt from bankruptcy based on what they are. Some of the most common options include:
- Personal jewelry (i.e., wedding rings, etc.)
- Work tools and resources
- Life insurance policies
- Pensions and similar long-term investments
- Awarded compensation from civil lawsuits
Any unprotected assets are liquidated by the state for as much as they can to pay your debts. However, that also means you can repurchase them from the court if you can raise the funds. That way, you may not have to lose anything if you and your lawyer can manage your finances effectively.
Work With Your Lawyer, and You May Not Lose Anything
Having a Saint Cloud bankruptcy attorney work on your case can make a big difference in how it turns out. Contact Kain + Henehan by calling (612) 438-8006 or filling out the online form, and let us find a way to help you through your bankruptcy.
