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Will I lose everything if I file bankruptcy?

If you file a chapter 13 bankruptcy the bankruptcy trustee and bankruptcy court do not take any of your assets. They are only relevant in that the value of them is a factor in calculating how much your monthly chapter 13 bankruptcy plan is.

If you file a chapter 7 bankruptcy, then the short answer is usually NO!  First let me briefly explain the chapter 7 bankruptcy trustee’s job. In a chapter 7 bankruptcy, the bankruptcy trustee’s job is to sell your assets. He owns everything you own until your hearing, where he abandons them, which means he doesn’t want them because he cannot make any money from them if he sells them. He will not sell your assets if he cannot get enough money to pay off the lien on the asset (example: car loan); pay the costs of selling it, insuring it and storing it; and give you the dollar amount which is yours (see the section on Exemptions). Unless he can do ALL of the above and still have money left for the creditors, he won’t waste his time selling your stuff.

Keep in mind that he is only trying to get money for the creditors and for his commission. He gets no real money for spending time on files that do not make a profit. Also, usually he does not get top dollar for assets.

For the above reason, most chapter 7 bankruptcy cases are called no asset cases, which means the chapter 7 bankruptcy trustee abandoned all the assets and did not sell anything. Thus, you lose nothing by filing a chapter 7 bankruptcy in most chapter 7 bankruptcy cases.

Keep in mind that, if you DO have something that the bankruptcy trustee wants to sell, he really doesn’t want your stuff in that he is not malicious; he just wants your money. You can pay the chapter 7 bankruptcy trustee a negotiated amount which the bankruptcy court approves so that the bankruptcy trustee can save the trouble of selling an asset and merely get cash from you or your family member so that he will have that to give to the creditors. My job is to advise you of the risk of losing an asset and trying to negotiate a favorable settlement if it even becomes necessary. I have a lot of experience in this area.

  • Learn More About Bankruptcy

    If its time to start considering a step toward bankruptcy we're here to help. I have been helping people through the process of filing bankruptcy in South Carolina for over 20 years. We are here for you if you have questions.
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  • Can I go to Jail for not Paying my Bills?

    No, not unless you committed a crime in the creation of the debt (for example, fraud). Simply borrowing money and not being able to pay it back is not a crime. Many creditors representatives will tell you lies on the telephone and say that they will have you put in jail. Perhaps they are too ignorant to know they are wrong or that it is illegal for them even to say that. See More Bankruptcy Q&A