Consumer, Protect Thyself - Bankruptcy and Your Assets

Filing for bankruptcy is not an admission to financial failure. Rather, you should view it as the first step in redeeming yourself and getting ready for a fresh start. However, filing for bankruptcy could mean that your creditors could try to seize your assets to try to recoup their losses.

In order to declare bankruptcy, you will have to file for chapter 7 according to United States Laws. You will need the assistance of a good bankruptcy attorney, who can guide you and help you to protect your assets (legally).

Different states have different laws on protecting your assets such as your home or car. If you choose to file bankruptcy on your own, you will have to study the laws pertaining to your case. However, by engaging the services of a competent bankruptcy attorney, protecting your assets will become much easier, at least on your part.

Protecting Your Assets

One of the most basic ways to protect your belongings is to transfer your property or other assets to your spouse’s name. This is perfectly legal, depending on the situation. Taking this step on your own can get pretty sticky, so it pays to consult a bankruptcy attorney before doing so.

If you have a proprietary firm or are a partner in a firm, then you could convert it into an S-Corporation or a Limited Liability Company (LLC), which are impervious to lawsuits that would attach your personal possessions. You could also inject more money into an employee-sponsored retirement plan, since these have unlimited protection. Check the level of protection in your state on homesteads, annuities and life insurance policies, and adjust them accordingly.

You could also form a trust to protect your assets. States such as Nevada and Rhode Island now allow the setting up of asset protection trusts. You do not need to be a resident of these states to form an asset protection trust. Independent trustees manage the trusts, and you will need to study the state laws carefully before forming one, since this move is normally irrevocable.

You should employ the services of an efficient attorney with enough experience in asset protection laws, so that you do not end up with a legal problem in that state.

Consult a Bankruptcy Attorney

There are many firms on the Internet that claim to be able to solve all bankruptcy problems, but you should cross-check those companies with the Better Business Bureau and with anyone who has dealt with them before employing their services.

Also, since prevention is always better than cure, take firm and positive steps before your bankruptcy problem snowballs into an asset-snatching one.

If you have filed for bankruptcy, be sure to give all the details of your property, cars, mortgage loans and bank accounts to your bankruptcy attorney, so that these can be sorted out first and proper legal protection methods can be applied to save them.

Depending on the laws in your state and your bankruptcy attorney’s skills, your assets have a greater chance of remaining in your hands while your financial situation gets sorted out to your satisfaction.