Lets assume from the start that you qualify to file chapter 7 bankruptcy, what assets can you expect to keep which is allowed by the court. The other question is how far back will they check. Read more to find out.
Even though the laws changed back in 2005, which made it a little tougher to file for chapter 7, there are still a lot of people who qualify. As you know this chapter of personal bankruptcy is a full discharge of unsecured debt.
Playing Cat And Mouse
I think we all know people try to game the system by hiding assets, if you didn’t know this you do now. The common go back time for the bankruptcy court to check all your statements of assets is 90 days. To be safe you should stop charging and preparing 4-5 month as a cushion. This 90 day window starts the day you file for chapter 7 bankruptcy, meaning 90 days back.
You are allowed to keep the following:
250K in a retirement plan
1 car worth 15K or less
$ 1000.00 in cash
Most necessary personal belongings (not a boat, RV, 2nd vacation home, etc.)
Wedding rings, some jewelry
There’s a question mark if your house has equity in it
As you can see some things would be hard to verify if you prepared ahead of time like jewelry. As long as you didn’t buy it on a credit card within a year or so, this could be presented as abuse, you should be fine except if it was in the luxury category. It’s possible the judge could force you to sell it or exempt that amount from the bankruptcy.
You will have to let your conscience be your guide if you try to hide assets from the court, is it done? Of course, do people get caught? Yes, what will happen? The judge will disallow the discovered assets from the bankruptcy, there could be penalties and I would guess the judge would scan your application with a fine tooth comb.
Find out some of the other facts about personal bankruptcy.
Go to Bankruptcy Newsline Learn more about filing for chapter 7 bankruptcy and what it means for your credit score. This is an important decision. Get informed, get more answers and most of all get on with life. You have choices, it’s time to use them.