If you have considered filing for bankruptcy you may be wondering what you can expect throughout the process, especially when it comes to your assets and your money.
While there is much to know about how your funds can be affected, there is also much to know about the dos and don'ts of your money both before and after your case.
Income and Assets One of the main concerns people carry into the bankruptcy process is the fate of their money and property.
The good news is that your income and assets are primarily used to help the court determine your overall financial situation, which is then used to develop a custom plan for your debt relief.
It is true that some of your money or assets could be used to satisfy debt obligations to creditors, but there are limits.
For example, in a Chapter 13 case a portion of your income will be used to pay creditors over the course of three to five years.
However, this amount is based specifically on the amount of disposable income you have each month.
In a Chapter 7 case, you may not be required to make cash payments to creditors, but some of your non-exempt property could be liquidated to satisfy debts.
However, it is important to note that bankruptcy exemption laws offer a range of protection over much of your essential property like house, car, clothing, home furnishing, valuables and the like.
Further, you can rest assured that funds such as Social Security, life insurance, domestic support payments and much of your retirement are protected from liquidation.
Dos and Don'ts Your money is important to your bankruptcy case in other ways outside of payments or liquidation.
For instance, your income and debts in the months leading up to your filing can be highly influential to your case.
Taking on more income or paying off large amounts of debt can disqualify you from eligibility.
On the other hand, significant drops in income or accumulating large amounts of debt just prior to filing could be viewed as suspicious to the court.
The general rule is to try to maintain a typical pattern of income and debt balances within the 180 days leading up to your case.
After your case has been completed, you are in a unique position to put your money to work for you.
Now is the time to apply what you learned in the debtor's education course and practice smart money management techniques.
Make a plan for your money by outlining a budget, including a specified amount you want to spend each month on a small line of credit to begin rebuilding your credit.
Keep your debt balances in check and be sure to make timely payments.
Remember that now is your chance to make a positive mark in your financial future.
While there is much to know about how your funds can be affected, there is also much to know about the dos and don'ts of your money both before and after your case.
Income and Assets One of the main concerns people carry into the bankruptcy process is the fate of their money and property.
The good news is that your income and assets are primarily used to help the court determine your overall financial situation, which is then used to develop a custom plan for your debt relief.
It is true that some of your money or assets could be used to satisfy debt obligations to creditors, but there are limits.
For example, in a Chapter 13 case a portion of your income will be used to pay creditors over the course of three to five years.
However, this amount is based specifically on the amount of disposable income you have each month.
In a Chapter 7 case, you may not be required to make cash payments to creditors, but some of your non-exempt property could be liquidated to satisfy debts.
However, it is important to note that bankruptcy exemption laws offer a range of protection over much of your essential property like house, car, clothing, home furnishing, valuables and the like.
Further, you can rest assured that funds such as Social Security, life insurance, domestic support payments and much of your retirement are protected from liquidation.
Dos and Don'ts Your money is important to your bankruptcy case in other ways outside of payments or liquidation.
For instance, your income and debts in the months leading up to your filing can be highly influential to your case.
Taking on more income or paying off large amounts of debt can disqualify you from eligibility.
On the other hand, significant drops in income or accumulating large amounts of debt just prior to filing could be viewed as suspicious to the court.
The general rule is to try to maintain a typical pattern of income and debt balances within the 180 days leading up to your case.
After your case has been completed, you are in a unique position to put your money to work for you.
Now is the time to apply what you learned in the debtor's education course and practice smart money management techniques.
Make a plan for your money by outlining a budget, including a specified amount you want to spend each month on a small line of credit to begin rebuilding your credit.
Keep your debt balances in check and be sure to make timely payments.
Remember that now is your chance to make a positive mark in your financial future.