Will I Have to Give Up My Car or Lose My Home?
When filing for bankruptcy, protecting a home or cars is often on the front of many people’s minds. This is probably because of a common misconception that the government and creditors will be permitted to seize all your assets and liquidate your entire estate. However, there are many ways in which your property can be protected from your creditors.
What Are Ohio Bankruptcy Exemptions?
You will not be forced to give up everything you own. Ohio has created exemptions that will allow you to retain many assets to give you and your family a fresh start. This includes all your 401ks, IRAs or other qualified retirement accounts. In our state, the equity in your home is often protected in full. The trustee and the creditors are not looking to take away your sentimental possessions or family heirlooms of modest value; the assets that will be looked at most closely are ones that hold significant liquid value such as:
- a second home,
- a car that has been fully paid off, or
- other valuable objects that can be readily converted to cash.
How to Protect Assets From Bankruptcy by Following 5 Important Guidelines
However, there are a few important guidelines that need to be addressed when it comes to asset protection:
- First, avoid purchasing any major items with a credit card or cash advance after you decide to file bankruptcy
- Second, don’t pay off more than $600 in debt within the three months prior to filing
- Third, wait to pay off debts or give gifts to any family members until after you get your discharge
- Fourth, don’t transfer any major assets, like a car or house, prior to filing
- Fifth, make sure you’re not going to receive an inheritance, large tax refund or major bonus any time soon.
Beware of “Fraudulent Transfers” to an “Insider”
One of the most common areas of concern involves “fraudulent transfers” to an “insider.” The insider is often a family member, close family friend or love interest. The transfer is intended to protect the property from creditors. These transfers are not limited to direct sales. But they may also apply to trusts formed to shield former assets from creditors. Not only will a trustee pursue these assets from current title holders, but the trustee may also attempt to deny or revoke your discharge.
You May Be Able to Make Arrangements With the Bankruptcy Trustee
Finally, even if an asset is reachable by the trustee, it may be preserved by paying into the bankruptcy estate the value to which the trustee is entitled. For example, a vehicle with no loan and a value of $5,000 over the exemption limit may be retained by making arrangements with the trustee to pay $5,000 over a period of months. In this way, the trustee receives the value and the debtor gets to keep the car or truck. In the case of a home, it may be necessary to pay through a Chapter 13 plan if the amount cannot be paid down in less than a year.
Learn More About How to Protect Assets From Bankruptcy
To learn more about how to protect assets from bankruptcy, speak to a Cleveland OH bankruptcy attorney at Benson Law Firm today.