Am I or is my family at risk of losing personal property by filing for bankruptcy?
In legal terms, “personal property” refers to any property that is not land or the buildings on it (which is known as “real property”). This means your cars, furniture, clothing, jewelry, and other possessions are “personal property”, and intangible items like retirement savings or a right to pension payments are also considered “personal property.”
One common misconception that prevents people from taking advantage of the benefits of bankruptcy is the idea that they will be turning their whole financial lives over to the court and everything they have will be wiped out by creditors. In our experience this is not the case. In fact, if you avoid bankruptcy because of myths and stigmas associated with it, you might find yourself selling your personal property to pay off debts instead of having those debts discharged through bankruptcy.
The purpose of bankruptcy is to give debtors a fresh start and an ability to move on and lead productive lives for themselves and their families. The purpose is not to make creditors whole at any cost and the bankruptcy process does not require debtors to start from scratch as punishment for their financial sins. Because of this, California law provides major exemptions that prevent the trustee from selling your personal property to satisfy creditors.
This is a complicated area of bankruptcy law that affects individual filers differently and you should reach out to us for a free consultation to discuss your particular situation (for instance, stay tuned for future posts about California's section 703 versus section 704 exemption options).
But in general, up to a certain value*, personal property that is exempted from liquidation includes:
household goods
clothing
furniture
jewelry
health aids
tools and equipment you use for work
money you’ve won in a personal injury or wrongful death lawsuit
money in your bank account (again, with limits)
*at ELC we will work hard to examine your case and will do everything we can under the law to avoid your property going above these exemption limits
This is not an exhaustive list. If you own equity in your home or car, this amount may also be exempt. Again, it is important that you consult with an attorney about your specific property and financial situation.
Call us today! We should know how bankruptcy will affect your personal property in our first conversation.
And stay tuned for more blog posts covering some of the other frequently asked questions about bankruptcy. We love sharing our expertise about bankruptcy so visit our Why Bankruptcy menu on our home page for more valuable information, including some of the FAQs and Dos and Don'ts we've already posted.
As always, and with all information on EnrightLawCenter.com, this post should not be considered legal advice, and without a written agreement you have not established an attorney-client relationship. Every case is different and we highly recommend consulting with a bankruptcy attorney before taking any action.
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