Asset Protection in Your Bankruptcy Case

Anyone who is filing for consumer bankruptcy likely has concerns about their assets and wants to learn more about asset protection in a consumer bankruptcy. Whenever you are planning to file for Chapter 7 bankruptcy or Chapter 13 bankruptcy in Illinois, you should speak with a bankruptcy lawyer about your case since there are so many intricacies of U.S. bankruptcy law. At the same time, you can educate yourself about some methods and options for asset protection if you are considering bankruptcy, and to understand how the different types of personal bankruptcy can affect the overall need for asset protection strategies.

Chapter 13 Bankruptcy May Not Require Asset Protection Strategies

If you are considering the possibility of filing for Chapter 13 bankruptcy, you should understand that this is a type of reorganization bankruptcy. As such, assets are not liquidated in order to repay creditors. Instead, the debtor will reorganize debts and will develop a repayment plan that will last for anywhere from three to five years. As part of that repayment plan, the debtor will make a single monthly payment that will go toward repaying creditors for debts owed. However, not all debts are counted as part of the total that needs to be repaid.

A Chapter 13 debtor can use bankruptcy exemptions—which we will discuss in more detail below for protecting assets in a Chapter 7 bankruptcy case—to determine which debts will need to be considered as part of the total sum that must be repaid through the repayment plan. Exempt assets do not need to be considered in this total. Certain types of debts will need to be paid back in full by the end of the repayment plan, and those debts will ultimately determine the total amount of your monthly payments under the repayment plan. In general, secured debts and priority debts typically must be repaid in full, but unsecured debts that are non-priority will not need to be repaid in full. If non-priority unsecured debt remains at the end of your repayment period, that remaining debt may be eligible for discharge.

Using Bankruptcy Exemptions to Protect Assets in Your Chapter 7 Bankruptcy Case

Different from a Chapter 13 bankruptcy case, all non-exempt property will be liquidated to repay creditors in a Chapter 7 bankruptcy case. Accordingly, you will want to learn about Illinois bankruptcy exemptions in detail, and you will want to use those exemptions to protect your assets.

What assets are eligible for protection from liquidation in a Chapter 7 bankruptcy case? Illinois has a wide variety of bankruptcy exemptions, which include but are not limited to the following, many up to a certain amount:
  • Home equity (up to $15,000);
  • Motor vehicle (up to $2,400);
  • Certain types of personal property;
  • Work tools and books;
  • Retirement benefits;
  • Payout from a personal injury lawsuit;
  • Workers’ compensation benefits; and
  • Veteran benefits.
Seek Advice from an Oak Park Bankruptcy Attorney

Whenever you have questions about consumer bankruptcy, including inquiries or concerns about asset protection in your bankruptcy case, you should seek advice from an experienced Oak Park consumer bankruptcy lawyer as soon as you can. One of our dedicated advocates can speak with you today. Contact the Emerson Law Firm to learn more.



See Related Blog Posts:

Can I Lose My Small Business if I File for Personal Bankruptcy?

Can I Still Seek a Bankruptcy Modification Under the CARES Act?




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