{"id":5746,"date":"2022-01-27T09:00:49","date_gmt":"2022-01-27T16:00:49","guid":{"rendered":"https:\/\/debtfreecolorado.com\/?p=5746"},"modified":"2022-02-09T12:49:41","modified_gmt":"2022-02-09T19:49:41","slug":"what-is-nonexempt-property-in-bankruptcy","status":"publish","type":"post","link":"https:\/\/debtfreecolorado.com\/what-is-nonexempt-property-in-bankruptcy\/","title":{"rendered":"What Is Nonexempt Property In Bankruptcy, And Why Does It Matter?"},"content":{"rendered":"
You’ve undoubtedly heard of bankruptcy. Some people swear they’ll never file bankruptcy, while others regularly use it as a tool. No matter which side you’re on, chances are you have heard of the term “non-exempt property.” But do you know what this is or why it matters? If not, it is time to read on and get some answers! Our <\/span>competent bankruptcy attorney<\/span><\/a> at Dray Legal can explain this in more detail.<\/span><\/p>\n <\/p>\n A bankruptcy filing is an option<\/a> for the majority of individuals who are already in financial difficulty long before they file.<\/span><\/p>\n But why do so many people find themselves in financial trouble? One factor is the high cost of healthcare, which makes it more difficult for many Americans to pay their bills. Medical debt is the primary reason Americans declare bankruptcy. Another aspect is the increased accessibility of credit loans, which makes it simpler for Americans to end up spending more than they can afford.<\/span><\/p>\n I’m sure other factors contribute to our nation’s high rate of personal bankruptcy, but I think these two are at the forefront.<\/span><\/p>\n <\/p>\n When an individual is declared bankrupt, his or her property vests in (becomes the property of) the Trustee (a civil servant or insolvency practitioner). They then exercise control over the merchandise sold to satisfy creditors.<\/span><\/p>\n All assets should be disclosed to the Trustee. What you can keep is entirely up to them. The Trustee seizes all non-exempt assets. They will sell them and use the revenues to pay for the bankruptcy’s fees<\/a>, charges, and expenditures before paying creditors. The Trustee confiscates your bank and savings accounts<\/a> when the bankruptcy order is issued. If the account is in credit, the amount is a bankruptcy asset<\/a>.<\/span><\/p>\n <\/p>\n Essentially, once you file for bankruptcy, you must disclose ALL of your assets.<\/span><\/p>\n Among your assets are the following:<\/span><\/p>\n Additionally, your assets may contain items that are often overlooked, such as bank accounts, life insurance, inheritance, and possible litigation.<\/span><\/p>\n A competent bankruptcy attorney<\/a> will provide you with a workbook to assist you in remembering your assets. Take your time when filing this worksheet.<\/span><\/p>\n Forgetting to list an asset might result in its loss. After listing all of your assets, your bankruptcy attorney<\/a> will review the exemptions to see whether any of your assets are exempt.<\/span><\/p>\n <\/p>\n In<\/span> Chapter 7 bankruptcy <\/span><\/a>proceedings, the phrase “non-exempt property” refers to a debtor’s estate property that does not qualify for a statutory exemption. A debtor’s property is not exempt “until the debtor claims an exemption for a specific property, at which time the property is exempt solely to the extent claimed or approved; exemptions do not operate automatically.”<\/span><\/p>\n The Trustee has the authority to seize and liquidate non-exempt property to benefit creditors. Additionally, creditors may take such property if a judgement against the debtor is entered.<\/span><\/p>\n Assuming\u00a0 the property is exempted in a Chapter 7 proceeding due to the debtor’s exemption claim. The property is then “taken from the estate for the benefit of the debtor,” and the “Chapter 7 trustee” is prevented from liquidating or distributing to allowed creditors.<\/span><\/p>\n The following are examples of property that a Chapter 7 debtor is frequently required to surrender (“non-exempt” property) and property that is typically permitted to be retained by the debtor (“exempt” property).<\/span><\/p>\n <\/p>\n Typically, the debtor must forego the following:<\/span><\/p>\n <\/p>\n The following items are considered exempt property (things that a debtor may typically retain):<\/span><\/p>\n <\/p>\n The filer maintains all non-exempt property as long as unsecured creditors get the value of the non-exempt asset under the <\/span>Chapter 13 repayment plan<\/span><\/a>. Meaning, the Trustee will not sell your non-exempt property. Rather than that, you will pay an amount equal to the value of the non-exempt property to your unsecured creditors (creditors whose debt is not covered by collateral).<\/span><\/p>\n <\/p>\n When you petition for bankruptcy under this chapter, the bankruptcy trustee\u2014the person chosen by the court to oversee your case\u2014will liquidate your non-exempt property to benefit your creditors. The Trustee will distribute the sale proceeds in the order authorized by bankruptcy law.<\/span><\/p>\nWhy do people file for bankruptcy?<\/strong><\/h2>\n
Bankruptcy and Your Property<\/strong><\/h2>\n
You Must Write Down All of Your Assets.<\/strong><\/h2>\n
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What does the term “non-exempt property” mean?<\/strong><\/h2>\n
Non-Exempt Assets<\/b><\/em><\/h3>\n
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Property That Is Exempt<\/b><\/em><\/h3>\n
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Non-Exempt Assets and Chapter 13 Bankruptcy<\/strong><\/h2>\n
What happens to non-exempt property in a Chapter 7 bankruptcy?<\/strong><\/h2>\n