What Are Nonexempt Property In Bankruptcy And Why Does It Matter?

If you are facing bankruptcy, you may be wondering what to do with nonexempt property. There are a few options available to you. You can either keep your non-exempt property, or you can use it to purchase another exempt asset.

Non-Exempt Property

When you file for bankruptcy, it's important to consider what types of property are considered non-exempt. The value of your non-exempt property will be determined by the bankruptcy trustee and they will decide whether they'll sell the property for enough to cover your debts. This means that your non-exempt property may be worth less than its market value. If this happens, your monthly payments will increase significantly.

When you file for bankruptcy, you should consult with a Bankruptcy Attorney Tampa who is familiar with the laws in your jurisdiction regarding the definition of non-exempt property. This attorney will be able to discuss your options and explain the importance of exemption planning.

Non-Exempt Equity

Before you file for bankruptcy, you should know if you have non-exempt equity. This can affect the type of bankruptcy you file. A Chapter 7 bankruptcy will sell non-equity items to pay creditors, while a Chapter 13 bankruptcy will reimburse creditors for non-exempt equity through a repayment plan.

To calculate your equity, subtract the amount of the debt from the value of your property. If you have a car, for example, your equity is $6,000, but you still have a loan for $38,000. This means that if you have a car worth $10,000, you have a non-exempt equity of only $2,775 in Arizona.

Also read about, How Can an Attorney Help With My Car Accident Claim?

Buying Non-Exempt Equity to Purchase an Exempt Asset

In bankruptcy, one option for purchasing an exempt asset is to buy non-exempt equity in a property. Buying non-exempt equity is a risky proposition. If you have equity in a car, for example, you may have to pay a trustee $4,000 to buy it. The trustee will then store the car and insure it, pay a dealer, and possibly even pay an auctioneer.

When buying non-exempt equity in order to purchase an exempt asset in bankruptcy, remember to keep track of every penny. You may be able to use the money from the sale of a non-exempt asset to pay off debts in a Chapter 13 plan. In many cases, people choose to use the money they receive from the sale of their non-exempt equity in their non-exempt property to purchase another exempt asset.

When to Keep Non-Exempt Property in Bankruptcy

If you own a non-exempt property, you may be wondering when to keep it in bankruptcy. Under Chapter 7 bankruptcy, you can keep non-exempt property from liquidation by offering to repurchase it. Otherwise, the trustee may decide the property is not worth selling and will file a Notice of Abandonment.

Non-exempt property can be anything ranging from fancy jewelry to family heirlooms. Some items are even considered non-exempt, like recreational vehicles like boats or cars. Luckily, most states offer an exemption for motor vehicles. However, other items, like a second home, are not.

Fortunately, you can get a cost-effective help with the bankruptcy process. Contact a Bankruptcy Lawyer Tampa FL at Galewski Law Group today if you have any questions regarding how they work. Don’t delay.