Can I use bankruptcy to protect my assets?

It is possible to use bankruptcy to protect your assets depending on the type of bankruptcy you file. If you file Chapter 7 bankruptcy you’ll have to relinquish your non-exempt assets, but even then you can protect certain assets with bankruptcy by converting non-exempt assets to exempt ones.

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Are my retirement assets, college savings plans, and asset protection trusts protected under the bankruptcy law?

Money rolled over from a pension into an IRA is also protected. However the law limits protection for funds in regular and Roth IRAs to $1,283,025, although this cap can be increased by the bankruptcy court. Contributions placed in a section 529 college education savings plan or in a section 530 education IRA at least 2 years prior filing for bankruptcy are off limits to creditors. An asset protection trust can be established under the laws of Alaska, Delaware, Nevada, Rhode Island and Utah.

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What is redemption in a bankruptcy case?

Bankruptcy redemption is an option in a Chapter 7 bankruptcy case that may allow you to keep a vehicle or other asset that is acting as collateral for secured debt. However, redemption may not be an option for all Chapter 7 debtors because it requires them come up with cash up front. Consult a Chapter 7 bankruptcy attorney prior to making a decision about bankruptcy redemption.

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What happens to a tax refund in bankruptcy?

A tax refund in bankruptcy is automatically considered the property of the bankruptcy estate. However, if you are expecting a tax refund while you are in bankruptcy, there are ways to keep the refund from going directly to the hands of your creditors.

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