Bankruptcy and your
property
Remember all property you own at the time
of filing is considered an asset. That means proceeds from
rental properties after you file are considered proceeds of
the estate. Inheritances and life insurance policies you
receive before the bankruptcy or within six months after
filing are property of the trustee. Anything you receive
after six months of the discharge that you had no knowledge
of is yours. The word knowledge is key here; if you know
someone owes you money before you file bankruptcy, but you
get it after your discharge, it’s still going to be
property of the estate! This applies to any money owed you
with your knowledge or pending lawsuits. For example, if
you have a pending personal injury claim that you fail to
list on your schedules, not only will the trustee seize any
settlement for your creditors, but you may be barred from
pursuing your case since you failed to list it. Don’t
forget you also may be prosecuted for bankruptcy fraud. If
you have a pending claim, check your state exemptions, your
claim may be totally exempt. In some states, worker’s
compensation claims are 100 per cent exempt, so you won’t
lose your claim even if you do file a bankruptcy. If an
attorney is representing you in your injury claim, the
trustee will contact your attorney to obtain more
information. In some cases, the trustee won’t bother with
the claim if he/she feels it isn’t worth it. Don’t try to
claim ignorance or play fast and slick with the rules,
because you will get burned.
Bankruptcy and your
Real Estate
All states have a homestead exemption
which means there is a certain amount of equity you are
allowed to have in your house before the trustee can sell
it. For example if your state has a homestead exemption of
$15,000 per individual and your house is worth $130,000 and
you owe $115,000, your equity is covered by the exemption,
and you can keep your house as long as you reaffirm and
keep making the payments. If you owed $100,000 you would
have $15,000 over exempt equity and the bankruptcy estate
would be entitled to it. Check the homestead exemption for
your state on our homestead exemptions page.