Depending on the type of bankruptcy you choose to file when it comes to your business, you could be risking everything, down to the most important aspects that you own. Many people fear the fact that they could possibly lose their home if they file for business bankruptcy. Many individuals who are facing the reality of Chapter 7 bankruptcy must face a desperate reality that their home could be taken from them. Today, we want to focus on Chapter 7 bankruptcy proceedings and whether or not you could lose your home when you file.
Paying Back Creditors with Assets
Particularly in Chapter 7 bankruptcy cases, the court will consider all of your assets as a way to pay back your creditors. Once you go through the process of filing for Chapter 7 bankruptcy, a bankruptcy estate is formed, which your personal property becomes a part of. Some of your assets could fall victim to repaying your creditors. Other property, however, is not exempt and is referred to commonly as \”nonexempt assets.\”
Nonexempt assets are pieces of property that the courts can use to sell off and gain money to pay off creditors. If you have made the decision to file for Chapter 7 bankruptcy, you are moving forward with the knowledge that you could be risking losing some of your property so that you can pay off your business debts. There are many types of nonexempt assets that could be used to repay your creditors. These include aspects such as:
- Property that isn’t your primary home, such as a vacation property
- A vehicle with equity
- Expensive collections and music instruments
- Valuable artwork
- Investments you have made
- Expensive clothes and jewelry
If the courts discover that you have nonexempt assets and they choose to seize them as a way to pay off your creditors, your creditors have the ability to file a claim against the assets so that they can move forward with repaying your debts. A trustee will be appointed to your case, who will be able to take your assets, sell them for what they are worth, and distribute all of the proceeds to the creditors who you still owe. They will only take assets that they know they will be able to sell without difficulty or that they know have worth.
Sometimes, this process is complex because many people will not be honest about their assets. If you are not forthcoming about your assets, you might receive a referral to the U.S. Trustee’s office. A search might even be conducted to ensure that you are not hiding anything if the case goes that far.
Many people make the decision to sell their own assets before they have to move forward with the last-resort choice of filing for Chapter 7 bankruptcy. If you are able to do this, this might be the better option so that you don’t receive a bankruptcy that stays on your credit report. No matter what you choose to do, you want to ensure that you are prepared for the outcome.
Help with Your Business Bankruptcy Case
So while you might not be facing the reality of losing your main home, many other assets could be taken from you to pay off your debts. Because of this, you need a skilled Chapter 7 bankruptcy attorney on your side who has handled many Texas bankruptcy cases in the past. At MJ Watson & Associates, our attorneys are here for you during one of the most difficult times of your life. You have many rights and we would like to ensure that you are protected every step of the way. Please contact us at 817-877-2861 to find out what we can do for you.