If you file for Chapter 7 or Chapter 13 bankruptcy, there is a chance that you could lose assets such as a house, car or art collection. However, even if you do submit a bankruptcy petition to a Tennessee judge, there is no guarantee that you will actually have any assets seized by creditors.
Most personal items are exempt from liquidation
Items such as clothes, dishware and power tools will not be seized by creditors at any point during the bankruptcy process. The same is generally true of a personal vehicle that is used to get to work, take your children to school or use for other vital purposes.
Retirement assets are likely safe from creditors
If you have an IRA, 401(k) or similar type of retirement account, you’ll likely be allowed to keep it. However, if you transfer money out of that account, it may be seized by creditors in an effort to repay an outstanding debt balance.
Property held in a trust is generally out of a creditor’s reach
Generally speaking, a creditor is only allowed to liquidate nonexempt assets held within the bankruptcy estate. The bankruptcy estate is typically considered to be anything that was owned in your name at the time you filed for relief from your debts.
You can retain equity in select assets
The federal government allows you to retain equity in a home, car or other asset that was liquidated or seized as part of a personal bankruptcy proceeding. In most cases, an item won’t be taken if it has negative equity.
If you are having trouble staying current with your debts, filing for bankruptcy may be an ideal way to obtain financial relief. Depending on the types of assets that you have when you file, it might be possible to obtain a discharge without losing any of your property.