What Assets Will I Be Required to Turn Over During a Bankruptcy Case?

 Posted on February 17, 2022 in Bankruptcy

If you have significant debts, you may be considering bankruptcy to wipe out some or all of what you owe, providing you with a fresh financial start. However, you may be concerned that you will have to give up some of your money or property during the bankruptcy process. By understanding how different types of bankruptcy address this issue and the type of assets that may be exempt, you can determine your best options and ensure that you will be positioned for success once your bankruptcy is complete.

Liquidation of Assets in Chapter 7 Bankruptcy

For many people, Chapter 7 bankruptcy may be the best option for debt relief, since it will allow for the discharge of many types of debts. However, it may require you to turn over certain assets. This is known as liquidation, since the assets that you turn over will be sold, and your creditors will receive payments for some of what you owe. Fortunately, the law provides a number of exemptions from liquidation, meaning that you will be able to maintain ownership of a significant portion of your assets.

If you own a home, a “homestead exemption” will apply, and the equity you own will not be liquidated during a Chapter 7 bankruptcy. While some states limit the amount that can be exempted, Texas allows for an unlimited homestead exemption, as long as an urban home is on a property of no more than 10 acres or a rural home is on a property of no more than 200 acres. However, even though your home may not be liquidated during bankruptcy, if you choose to discharge your mortgage loan, your lender may foreclose on the property and repossess the home. You may be able to avoid the loss of your home by using Chapter 7 to discharge other debts while making sure you are current on your mortgage payments and continue to make ongoing payments after completing the bankruptcy process.

Exemptions also apply to other types of personal property. The total amount of property that can be exempted is $50,000 for a single person or $100,000 for a family. Texas law details the types of property that can be exempted, including a motor vehicle for each family member with a driver’s license, two firearms, furniture, family heirlooms, clothing, pets, tools or equipment used for a person’s occupation, athletic equipment, and jewelry worth up to 25 percent of the applicable exemption limits. During the bankruptcy process, you will need to determine the value of your property, and you may be required to turn over items that do not fall within the exemption limits. For example, if your family owns three firearms and a motorcycle in addition to cars used by you and your spouse, you may be required to turn over one firearm and the motorcycle. You will also be required to turn over any other assets that are not exempt, such as money you have saved in a bank account.

Contact Our San Antonio Bankruptcy Liquidation Lawyer

When filing for Chapter 7 bankruptcy, you will need to perform an inventory of all of your assets, and you may be required to turn over certain types of property. If you are looking to avoid the loss of property, Chapter 13 bankruptcy may be a preferable option. At the Law Offices of Chance M. McGhee, we can explain the benefits and drawbacks of different types of bankruptcy, and we will work with you to determine the best steps you can take to receive the debt relief you need. Contact our Boerne bankruptcy attorney at 210-342-3400 to learn about your options in a free consultation.

Sources:

https://statutes.capitol.texas.gov/Docs/PR/htm/PR.41.htm

https://statutes.capitol.texas.gov/Docs/PR/htm/PR.42.htm