| What is an asset? |
Assets are the stuff we own (cars, furniture, clothes) as well as the right
to sue someone for damages, workers compensation claims, franchises,
copyrights, inheritances, and death benefits. All assets must be fully
disclosed when filing bankruptcy. However, exemptions are used to protect
the majority of our assets during bankruptcy. [top] |
| What is an exemption? |
An exemption is the property you can keep free from the claims of your
creditors and they apply under both bankruptcy and non-bankruptcy law, which
means you can still claim an exemption if you are being garnished by a
creditor. You are entitled to keep 75% of your wages as an exemption.
However, exemptions do not apply to claims for taxes, child support, or
alimony. [top] |
| How are exemptions determined? |
Although the Bankruptcy Code is federal law, exemptions are determined by
state law and therefore vary from state to state. In Oregon you are limited
to the Oregon exemptions; however, Washington residents have the choice
between federal and Washington state exemptions. [top] |
| How can I make sure my assets are protected before I file bankruptcy? |
Once a bankruptcy is filed, your assets become part of your bankruptcy
estate which is administered by a trustee. In a chapter 7 case, you are
given an opportunity to buy the non-exempt equity back from the trustee. In
a chapter 13 case you keep your assets in exchange for paying into your
repayment plan the same amount of money the creditors would have received if
the assets were liquidated. In some cases, legitimate pre-bankruptcy
planning, under the guidance of an experienced attorney, may protect
otherwise non-exempt assets. [top] |
| What happens to my house, car, and other assets if I file bankruptcy? |
Bankruptcy and state law protects an amount of property from the claims of
your creditors; however, if the value of your property exceeds the amount of
protection provided by the law then you have non-exempt equity in your
asset. Non-exempt equity in an asset means it may be subject to liquidation
by the trustee in a chapter 7 case. However, in most cases, a chapter 7
trustee will not sell an asset unless it provides a meaningful distribution
to the unsecured creditors. Or, the trustee may give you the option to pay
the non-exempt equity into your bankruptcy estate. Overall, the average
person loses few, if any, assets in a chapter 7 case. Chapter 13 by nature
protects assets from liquidation. [top] |