How to Keep Your Property Secure in Bankruptcy

If exemption laws protect your equity in most cases, how is it that some people end up losing property in bankruptcy? In many cases, this happens if you cannot claim an exemption.

You can lose your exemptions for many reasons:

• fraud
• lying under oath
• hiding assets, etc.

So, for example, if you try to hide an asset and are later found out, you might not be allowed to claim an exemption in that property, even if you could have used an exemption if you had disclosed it.

You might not be able to claim an exemption in your house, for example, if it is not in your name. Sometimes people put their homes in a trust. When they do this, the trust owns the house, and they own the trust. This destroys the ability to claim the exemption. A person could lose their house if they have done this and filed for bankruptcy.

Another problem involving home ownership is when a parent transfers the deed to the home to children, in advance of death. The children then want to file for bankruptcy, but they “legally” own the parents’ house. It is not their residence, so they cannot apply the residence exemption to it. If they file bankruptcy, the house could be lost to the bankruptcy court.

There are other examples, but family transfers account for the majority of common problems that result in loss of property in bankruptcy.

If you are considering bankruptcy, don’t transfer anything out of your name. Don’t allow any property to be put into your name.

Check first with an experienced, certified bankruptcy specialist. I regularly see people do things that PREVENT them from filing bankruptcy. Or, at the very least, do not permit them to keep property in bankruptcy.

The things they do are legal,but they have unexpected consequences in bankruptcy.

Ask first, before taking any action, if you are even remotely thinking about bankruptcy. A free consultation could be worth many thousands of dollars.