Even responsible, successful adults can find themselves suddenly facing financial hardship. Job loss, medical issues or divorce can leave people unable to pay their bills and struggling to manage financial obligations.
Those with below-average income over the last six months may qualify for Chapter 7 bankruptcy. They can potentially discharge certain unsecured debts within a matter of months. Some people who are eligible for Chapter 7 proceedings choose not to file out of concern for their property. A Chapter 7 bankruptcy could require the liquidation of certain assets to repay creditors.
How can those hoping to reduce their financial obligations and avoid aggressive collection activity protect their assets in a bankruptcy case?
There are bankruptcy exemptions available
Chapter 7 bankruptcy might not offer much financial relief to people if they had to give up all of their property to be eligible for a discharge. Thankfully, people have the right to use exemptions to protect certain assets during the bankruptcy process.
Filers in Massachusetts can use either the federal bankruptcy exemptions or the state bankruptcy exemptions. They can protect a certain amount of home equity, vehicle equity and personal property.
Many types of retirement savings and pensions are also eligible for exemption from the liquidation process during a bankruptcy. Certain exemptions, such as homestead exemptions, can be especially important for those with valuable resources to protect.
Filers may need help evaluating available exemptions, choosing the right exemptions and submitting the appropriate paperwork to the courts. Having support while preparing for a Chapter 7 bankruptcy filing can help people prevent the liquidation of the assets they may rely on to rebuild after their bankruptcy.