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Benefiting from debt relief through bankruptcy does not mean losing your belongings and assets like your car, home, and retirement plan. An experienced bankruptcy attorney can help you choose the right chapter of bankruptcy for your situation and protect your assets legally.
Chapter 7 Bankruptcy Exemptions
When you file for Chapter 7 bankruptcy, many of your assets are protected by exemptions that mean the trustee cannot take them to pay your creditors. There are also many forms of pre-bankruptcy planning that can be used to help you protect your assets, although this should always be done very carefully.
Asset Conversion of Bank Account Funds
Cash and bank account deposits may be protected by an exemption, but if some of the cash is not, you may still be able to protect the money through careful planning before you file. Also known as asset conversion, this legal means of reorganizing your assets can help you protect as much property as possible from your creditors. If you have nonexempt cash in a bank account, the funds over the exemption could be used to purchase or invest in assets that are exempt.
The non-exempt funds in your bank account can be used to:
- Pay down your mortgage to use toward your homestead exemption
- Make an annual contribution to your IRA, retirement account, or exempt pension plan
- Buy a life insurance policy
- Pay down nondischargeable debts like student loans, child support, or taxes
Buy exempt personal property like household goods, clothing, furniture, or essentials.
Do not try to hide assets, give them away, or transfer them to someone else’s name. This can get your bankruptcy petition dismissed with prejudice or result in criminal charges. You should also avoid paying debts to friends or relatives before you file. If you do, the trustee can sue your friends or relatives to retrieve the money.
Asset Protection in Chapter 13 Bankruptcy
Chapter 13 bankruptcy may be a better option if you have substantial assets because your property is already protected, but you will be required to pay back the amount of nonexempt property over the life of your repayment plan, which is 3 to 5 years.
One important benefit of Chapter 13 is you keep all of your property without worrying about exceeding exemption limits or converting nonexempt assets. The amount you will need to pay your creditors will depend on how much property you can exempt, however. The value of nonexempt assets is paid to nonpriority unsecured creditors, such as medical debts and credit card debts, in Chapter 13. Exemptions can be used to keep your Chapter 13 plan payments low by lowering the amount you need to pay your creditors.
Contact a Nevada Asset Protection Attorney
Before you file for bankruptcy, it’s a good idea to consult with an experienced bankruptcy and asset protection lawyer. If you have assets that are nonexempt, such as funds in a bank account, it’s possible to convert the property to exempt assets, but this must be done carefully and in good faith to avoid defrauding or hindering your creditors. Contact Las Vegas BK for a free consultation with a Las Vegas bankruptcy attorney to determine the best strategy for protecting your assets in bankruptcy.