The idea behind bankruptcy is to assist a person in resolving debt and learning better financial management. Being able to start again is not just about leaving the past behind, it also requires a person to protect their remaining assets. The benefits of this can be maximized by NOT borrowing, selling or depleting these assets before the bankruptcy is filed.
Bankruptcy attorneys often meet clients who have engaged in desperate measures in order to stay on top of increasing debt. This behavior occurs under the misconception that those positive assets would be lost after filing the bankruptcy. In reality, it is more difficult to recover from a bankruptcy if a person does not have the basics, such as a home, clothing and transportation. In some cases, the basics may also include retirement accounts, unemployment benefits and other tools of your trade.
Bankruptcy Protection and Your Assets
In most cases, bankruptcy will provide protection for your assets. A Chapter 7 filing, also known as a “straight bankruptcy,” will protect assets that are considered exempt, which means the majority of people filing a Chapter 7 will be able to hold on to what they own. If there are assets that have a higher value than what is exempt by law, an “adjustment of debts” under a Chapter 13 can help a person keep what is non-exempt. If someone has assets that are not considered exempt, an experienced bankruptcy attorney can develop a plan to protect the assets when the case is officially filed.
Bankruptcy Can’t Bring Back What Has Already Been Lost
While bankruptcy does provide some protections, it cannot bring back what has already been lost. Assets that have been spent, sold or borrowed against to avoid financial disaster could have been saved if the bankruptcy had been filed sooner. The result of this is a person who will not have anything left with which to start life over.
Many people facing bankruptcy do not understand the consequences of borrowing, selling and spending and are unaware of which assets are protected under law. They also do not know how to place themselves in the optimal position prior to filing the case.
Are You Considering Bankruptcy?
Those who are considering a bankruptcy filing and live in Wichita or the surrounding area should consult with an experienced bankruptcy attorney to avoid the mistakes that may result in the loss of valuable assets. If you would like to see if bankruptcy is right for you, feel free to set up a free consultation by either calling me or clicking on”Get Debt Relief Now.”