If you plan to file for Chapter 7 bankruptcy, having a bankruptcy lawyer is essential. In some cases, a person may have assets that he or she would not be able to retain either because the value of the assets are too high or there are no applicable bankruptcy exemptions to protect the assets. Before filing for bankruptcy relief, you generally are allowed to rearrange your finances and property in a way that’s legal and allows you to maximize your bankruptcy exemptions to benefit you as much as possible. The more exemptions you can claim, the more of your assets you can protect from the liquidation process involved in a Chapter 7 case. The bankruptcy attorneys at Behm Law Group, Ltd. can assist you during this time and throughout the process of filing for Chapter 7 bankruptcy in Jackson, MN.
It’s possible for you to work with your attorney and convert many properties or cash itself into exempt assets without crossing the line into excessive exemption planning or fraud. The help of a bankruptcy attorney is crucial. You first must determine the values of your assets and whether there are exemptions available that will protect them. Also, you must determine if the value of a particular asset exceeds the allowance of the particular exemption with which you intend to protect it.
Nonexempt vs. Exempt
Generally speaking, if an asset is determined to be a basic need to the filer, it’s considered an exempt asset. U.S. Bankruptcy Courts do not want to strip filers of all their property, even if the value of those assets could be used to repay creditors for debts that are dischargeable. Homes, means of transportation, wages, and other important properties are categorized as exempt in the majority of Chapter 7 cases.
Nonexempt properties, however, are often involved in a Chapter 7 case. Many assets are considered nonexempt from the liquidation process because their value is needed for repayment in order to keep the process balanced between debtors and creditors.
Spending your nonexempt assets (i.e., the money in your bank accounts) is one lawful way to make use of them for your benefit, but keep in mind you should only spend them on necessary items like food, gas, repairs to your vehicle. You must not pay debts to friends or relatives or make gifts to friends or relatives or put assets into someone else’s name. Also, you must remember that you will be asked by your lawyer and by the bankruptcy trustee administering your case for a thorough accounting concerning how you spent any non-exempt money and how you disposed of any non-exempt assets. The Bankruptcy Code requires you to do this and you could be denied bankruptcy relief if you don’t do it. Spending that money on luxury items such as expensive trips or fancy furniture or big screen televisions could also be considered excessive and could be scrutinized. Chapter 7 code also allows you to sell nonexempt properties and use the money gained to buy exempt assets (for example, selling a yacht and using that money to buy a household vehicle).
Unfortunately, it can be easy to cross the line from legitimate exemption planning and engage in conduct can be viewed as fraudulent or inappropriate. The help of our bankruptcy attorneys prior to filing for Chapter 7 bankruptcy in Jackson, MN, is the key to doing exemption planning right. For more information, contact Behm Law Group, Ltd. today at (507) 387-7200.