When a person files for bankruptcy, they are hoping for the stress of insurmountable debt to disappear. Depending on which type of bankruptcy protection they file, how that debt is repaid differs greatly. One of the key components of settling debts in bankruptcy is the value of the assets. But, what exactly is defined as an “asset“ when filing for bankruptcy protection?
Assets Under Chapter 7 Bankruptcy
When an individual files for Chapter 7 bankruptcy protection, they are filing for the purpose of protecting themselves from creditors which can take control of their assets and liquidate them to help raise funds to satisfy the debts which have accrued. The debtor has the advantage of protecting their assets, but the debtor has to be aware that certain assets may be subject to liquidation by the trustee including any personal property the individual owns, such real estate interests, business or intellectual rights, and other intangible or tangible assets. In that case, a Chapter 13 filing would be more proper.
The trustee of a Chapter 7 bankruptcy is also entitled to assets which may not be in the possession of the individual filing at the time of their declaring bankruptcy. For example, if the person has a right to receive an asset, that asset becomes part of the bankruptcy estate, even if that asset has not yet been acquired. Furthermore, the bankruptcy estate is entitled to the appreciation in any value from property held by the estate during the bankruptcy, and any revenues or profits generated by property held by the estate, such as rental income, investment dividends, or intellectual property rights fees.
While bankruptcy generally includes all property a person owns at the time of the bankruptcy, property or assets obtained after filing for bankruptcy are generally not held as property of the estate. The only exceptions for this rule are for inheritance acquisitions, marital settlement agreements, or life insurance and death benefit payments.
Assets Under Chapter 13 Bankruptcy
When an individual files for Chapter 13 bankruptcy protection, their assets are protected, and if the asset, such as a home, is being paid directly to the bank, it will not be subject to any foreclosure or related collection process. Unlike a Chapter 7 bankruptcy, however, under Chapter 13 bankruptcy, all the person’s debts are listed and the debtor has the benefit of eliminating or presenting a plan to pay the subject debt in a manner reasonable to the debtor. During this repayment period, creditors cannot foreclose on the individual’s home or move to have their car or other assets repossessed. In a Chapter 13, creditors are paid form the income that remains after paying their necessary living expenses.
Work with Florida’s Largest Bankruptcy Law Firm
At the Law Offices of Patrick L. Cordero, we are proud to be the largest bankruptcy law firm in the entire state of Florida and third in the United States. Offering personalized attention to every client, we truly understand that your situation is unique. If you are considering applying for bankruptcy protection, regardless of the type, having an experienced lawyer on your side can go a long way.
Trust the Lawyer of the Decade, the Minority Lawyer of the Year, and the Largest Consumer Bankruptcy Firm in Florida, and we’ll work to get you the best financial outcome possible. Trust in the experienced and passionate legal team at The Law Offices of Patrick L. Cordero to help you. Call for a free, no-risk consultation today at (305) 445-4855.