WILL I LOOSE VALUABLES IN A NYC CHAPTER 13 BANKRUPTCY
Just because someone is in need of Bankruptcy relief does not mean they doe not have valuable assets to protect. Often in a Chapter 7 Bankruptcy case a trustee will try to sell a Debtor’s assets. Assets can be kept out of the Bankruptcy process by using statutory exemption schemes. This is legalese for you have to put certain legal code in your case to keep your stuff. The exemptions all have limits and this blog will discuss the important things you need to know about keeping your valuables in Bankruptcy.
I am only licensed to practice Bankruptcy law in New York, so this article will only discuss New York law, you should contact an attorney in your jurisdiction to learn more about the area you live. Here in New York City we are allowed to either use the New York State exemptions or the Federal exemptions. You must select one or the other and you can not take certain exemptions from each. The Federal exemptions are often appealing because is has an approximately $13,000 wildcard exemption that can be used for almost anything.
If someone owns Real Property the NY State exemptions are usually better. The NY State homestead exemption is over $165,000 (and this adjusts periodically). So if you have a home worth say $500,000 and you owe $100,000 on your mortgage and you use the NY homestead exemption a chapter 7 trustee would likely sell your home. He would give you $160,000 based on your exemption, pay off your mortgage, pay himself for doing this and pay off your debt. If there is anything left over he would send you the balance.
Please note, you must use the proper exemption in your bankruptcy paperwork to get the benefit of the exemption. I have seen pro se debtors (without an attorney) loose valuable assets just because they did not know how to use the exemptions.
In a Chapter 13 no one will sell your stuff. You make small monthly payments for 36 or 60 months so that you get to keep your stuff. If you have substantial equity in your assets your payments could go up but it is your attorney’s job to keep your payments as low as possible. Essentially, your attorney needs to present a case for your assets having the lowest possible value so that your payments are low.
If you decide that you want to file a Chapter 7 be aware that you do not have the absolute right to have your case dismissed. If a trustee in a chapter 7 is trying to sell your assets or for some reason you don’t like the way your case is going you don’t have the automatic right to have your case dismissed. Most likely if this happens you are going to loose your stuff. In a Chapter 13 you have the absolute right to have a case dismissed as long as it was filed in good faith.
Keeping your assets in Bankruptcy can be tricky. You should contact an attorney who has experience in Bankruptcy matters. My office is in NYC and we focus primarily in Bankruptcy law. Call 212-244-2882 now to set up a free debt relief consultation.