Despite the fear and misconceptions surrounding bankruptcy, many people find it to be a legitimate way of getting rid of their debts. Still, many people wonder about what will become of their assets if they declare bankruptcy. This concern is quite understandable, so we need to understand the basic forms of bankruptcy.
In chapter seven bankruptcy, your aim is to discharge, or wipe out, your debts completely. The downside, however, is that you may have to forfeit some of your assets in order to pay off at least part of your debt.
In contrast, chapter 13 bankruptcy creates a repayment plan which you follow for about 3 to 5 years. Chapter 13 doesn't get rid of your debt, but neither does it require you to liquidate your assets.
As you can see, chapter seven is the best option if you wish to rid yourself of your debt entirely. The major problem with this, besides the damage to your credit, is liquidation. In other words, you will have to get rid of some of your assets to help pay creditors what you owe them.
The good news (or the bad news, depending on your perspective) is that most people who file for chapter seven bankruptcy don't have any assets that qualify for liquidation. If your financial situation has come to this point, then you probably don't have much to liquidate.
That brings us to a question of the two principle assets that most people are concerned with: their house and their car. In most states, there is a homestead exemption which helps to protect the family's a house from creditors. However, the specifics depend on many factors including the state in which you reside, as well as a value of your house and how much you owe.
You should realize that finding a good bankruptcy attorney is essential to help you file bankruptcy successfully. There are just too many details for you to try to figure everything out on your own.
Still, you should continue to learn as much as possible about your options from articles like this one before you speak with your lawyer. This can help you become a more informed consumer and get through the process more efficiently.