What are some myths about asset loss in bankruptcy?

| Dec 24, 2018 | asset forfeiture |

When you decide to file bankruptcy in New Jersey, you may not completely understand how the process works. The most confusion often comes from what will happen with your assets. Many people mistakenly believe they will lose everything. However, bankruptcy is not meant to hurt you. It is not a punishment. The goal is to help you start fresh and get control over your finances again. To do that, you need to have some assets at your disposal.

According to Nerdwallet, you will not lose all your assets in a bankruptcy. You do get to keep assets that you need to carry on. The state gives you exemptions, which are assets you may keep. They are typically limited in value, but enough so you can continue on your day to day activities. They include keeping a place to live and a vehicle to drive.

The court seizes your assets to sell them and pay back your creditors, so you also will keep assets that have little to no resell value. For example, your personal clothing items and furniture are usually not worth enough for the court to take them. The exception is if you own high valued items, such as designer clothing. In general, though, you will keep all your personal property.

One note to keep in mind is that if you file Chapter 13, you keep all your assets because the court will not take them to pay creditors. Instead, you develop a repayment plan to pay back your creditors. This information is for education and is not legal advice.