What Can I Keep Through Bankruptcy
What Can I Keep Through Bankruptcy?
When a bankruptcy is filed, a “bankruptcy estate” is created. It is an entity similar to a Trust or Corporation. The estate is comprised of all property the debtor owns or has rights to. Under some circumstances, property that the debtor has transferred, or property that they become entitled to after the bankruptcy is filed, may also be property of the estate. The debtor does not have the right the sell, transfer, or encumber that property until it is no longer property of the estate.
In Chapter 7 the property is usually no longer property of the estate when the case is closed, in Chapter 13 when the plan is confirmed. Generally, in chapter 7 the case is closed shortly after discharge order is entered. However, under some circumstances the case can be kept open for administration of assets even though the discharge order has been entered. In most cases, the property will probably never leave the debtor’s possession and they will be allowed to keep it, because of “exemptions”.
Are There Any Exemptions?
Before the “estate” is used to pay creditors, the debtor can exempt certain property. That means the debtors gets to keep the exempt value of the property. Generally, the debtor may elect Federal or Washington State exemptions. If they have not lived in Washington continuously for the past two years, they may have to use the exemptions of the state they lived in previously. If the debtor is married and filing jointly, they are entitled to double the federal exemptions.
In Chapter 7, if the Trustee determines that there is non-exempt equity in property, the debtor usually CAN NOT elect to have the case dismissed. In Chapter 13, the debtor can usually have the case dismissed if they wish. However, there is no absolute right to have a bankruptcy dismissed. Therefore, it is important to provide accurate and complete information so that your bankruptcy attorney can advise you accordingly.
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