Selling or transferring property or large sums to a close relative or friend can be seen as committing bankruptcy fraud and cause serious problems for you.
Portland, OR – A major concern for people filing for bankruptcy is how much property they stand to lose. Although bankruptcy can represent a new beginning and an important step toward financial security, we tend to focus solely on its negative aspects, such as losing property.
Below, our lawyers break down how you stand to lose property when filing for bankruptcy, and more importantly, how to avoid that.
You don’t need to lose property.
While it’s possible for you to have assets/property taken from you by court-appointed trustees during a bankruptcy trial, it’s not the rule. In fact, many people go through a bankruptcy case without losing any assets at all.
This all depends on the type of filing you go for (or are eligible for). Basically, an individual debtor will choose between Chapter 7 and Chapter 13 bankruptcy. While Chapter 7 bankruptcy is quicker and overall cheaper, it raises the risk fo losing property.
Note: People filing for Chapter 13 bankruptcy get to keep all of their property, provided that they keep up with a monthly payment plan to debtors.
Your Portland bankruptcy lawyers will advise you on which type of bankruptcy is best, and which you are eligible for (as income plays an important role in this).
If you file Chapter 7, will you lose your home?
Not likely. Through the state’s Homestead Exemption, an individual debtor is allowed to protect up to $40,000 in equity in a real estate property ($50,000 if joint filers are members of the same household). This exemption applies, provided it doesn’t exceed 1 block in urban areas or 160 acres in the country.
Similarly, there is a Motor Vehicle Exemption of up to $3,000 in a motor vehicle, as well as various exemptions for personal property.
- Up to $3,000 in household goods;
- Up to $10,000 in personal injury dues;
- $1,800 in jewelry, clothing, and other wearing apparel;
- Up to $5,000 in trade tools, books, apparel;
- Exempt funds, accounts, etc. of no more than $7,500.
Lastly, Oregon also offers a Wildcard Exemption that protects personal property (except real estate) of your choosing, for up to $400.
If it’s not exempt, will you lose it?
In some cases, yes, if an item is not exempt, it may be sold by the trustee during your bankruptcy trial. This is where legal help can really come in handy, so make sure you pick the best Oregon bankruptcy lawyers to aid you in your legal battle.
You may lose your home or vehicle, if you are behind on payments for it, during a bankruptcy trial. However, it’s not guaranteed that you’ll lose whatever isn’t exempt.
What not to do if you’re considering bankruptcy
It’s tempting to try and transfer property to a family member or friend before filing for bankruptcy, to protect your property. Don’t. The court will comb through your previous financial decisions. Selling or transferring property or large sums to a close relative or friend can be seen as committing bankruptcy fraud and cause serious problems for you.
Instead, trust in your Portland bankruptcy lawyers. Be upfront about your assets, debts, and concerns, and they will do their best to help you protect as much property as possible. Remember, the bankruptcy court was created to give you a new chance, not rid you of your assets!
Also, since you’ll be dealing with lawyers and court clerks for the next few months, now would be a good time to educate yourself a bit on legal matters.
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