When you file bankruptcy you must list all of your assets and all of the debts you owe. Essentially your bankruptcy petition, on the day it is filed, is a snapshot of what debts you owe and what you own.
The Bankruptcy Estate
Also, when you file for bankruptcy something called your “bankruptcy estate” is created. The bankruptcy estate can be understood as the debtor’s interest in his or her property on the day bankruptcy is filed. The Bankruptcy Trustee assigned to administer the case is in control of the estate.
Understand that as long as all of your assets, property, and other belongings are listed, properly valued, and exempt in the bankruptcy petition, there is no risk of losing assets. While the Bankruptcy Trustee has the power to seize and sell assets, then use the proceeds to pay a pro-rata share to certain of your creditors, the vast majority of Chapter 7 bankruptcy cases are “no-asset” cases. This means the debtor (the person who files for bankruptcy) does not have assets that can legally be seized, so the debtor loses nothing through the bankruptcy process.
The majority of people who file for bankruptcy get to keep most or all of their belongings through the bankruptcy process, including personal belongings, jewelry, their retirement accounts, their car, and even their house.
Listing Your Debts
You must list every debt you owe, and the creditor you owe, in your bankruptcy petition. You do not get to pick and choose which debts to include in your bankruptcy petition. Bankruptcy law is designed to protect your rights, but also protect the rights of your creditors. This means that you cannot purposefully exclude listing a creditor for any reason.
For example, a debtor may want to pay the debt they owe back even after filing, or they may not want a creditor to be notified about their bankruptcy. First, nothing in bankruptcy law precludes you from paying back a debt if that is what you want to do. After a successful bankruptcy you are no longer legally obligated to pay back the debts that were discharged, but if you want to do so, that is your choice. Regardless you must list all creditors. Second, your creditors will receive notice of your bankruptcy filing and the date for your Meeting of Creditors. It is rare for creditors to attend this meeting. All creditors must be listed and will be notified.
Benefits of Bankruptcy
The benefits of bankruptcy are vast. Bankruptcy is a powerful legal tool that can wipe out your debts and stop your creditors from taking any collection action against you. However, to get the benefits of bankruptcy, the trade-off is that you must give full disclosure in your bankruptcy petition.
Your bankruptcy petition is filed with the Bankruptcy Court under penalty of perjury. It must be truthful and accurate to the best of your knowledge, including complete lists of all you own and all you owe on the date you file.
Deciding Bankruptcy Is the Right Choice for You
Here at the Law Office of Barbara B. Braziel, we will make sure you understand the benefits of bankruptcy and how filing with affect you and your family. We file hundreds of Chapter 7 and 13 bankruptcy cases every year. But our clients are never just a number. You will not be left in the hands of a paralegal. You will have access to your attorney throughout your bankruptcy case.
Find out more about Bankruptcy in our guide: All About Bankruptcy
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We are a debt relief agency. We help people file for bankruptcy relief under the U.S. Bankruptcy Code.