Many individuals avoid filing bankruptcy because they’re afraid that they will lose everything they own to the bankruptcy court. This actually would fall under bankruptcy myths and legends found on blogs on the Internet. I don’t know where anyone got this idea, but it has been a popular opinion until lately.
It is one reason people use bankruptcy filing as a last resort to resolve debt issues. This rumor has gone around for years, and many experts believe the credit industry probably started it.
The creditors and debt collectors have told doozies over the years with the idea of scaring people into continuing to pay their debts. Some creditors have gone as far as telling the debtor that they would be arrested and thrown in jail if they didn’t pay their debts.
The last time I checked, there is still no debtor’s prison in the USA. As long as people keep falling for these tactics, I suppose the lies will continue.
When an individual decides to file bankruptcy and sits down with a bankruptcy attorney, the first question they will ask is, “Will I lose all my stuff?” Typically, the bankruptcy attorney will explain the bankruptcy exemption laws and how they work.
The idea of getting a fresh start from filing bankruptcy can’t happen if you take everything away from the individual. This is why Congress enacted generous bankruptcy exemption laws to allow an individual to protect a certain amount of property when filing Chapter 7 bankruptcy. On top of that, in today’s economy, used personal belongings don’t have much value as they did in the past.
The last thing a bankruptcy trustee wants to do is load up the truck of used furniture and head on down to the swap meet to liquidate it. The bankruptcy trustees always weigh the time versus the reward for selling nonexempt property. And this is only in the case of property that is not protected by an exemption law.
The property on the bankruptcy trustee’s radar is valuables like antiques, a car, bank accounts, or real estate. Once again, it depends heavily on how easy it is to liquidate the property. If something will take an extended amount of time and only recover a small amount of cash, they probably won’t waste their time.
This is another reason why hiring a bankruptcy attorney can be invaluable. The bankruptcy attorney that practices in that district will know the bankruptcy trustee and know what is allowable and expected of the debtor to get a successful bankruptcy discharge.
This will make the entire bankruptcy run smoothly, from filing the bankruptcy petition to the bankruptcy discharge.