What you can keep if you file bankruptcy

What you can keep if you file bankruptcy
In every state, de1125 you can retain certain property
and assets when you file for bankruptcy. You
may be surprised to discover that in some
states, you can keep your home regardless
of its value!  Most states, though, allow you to
protect a certain amount of home equity.
Additionally, you're allowed to retain some
other types and amounts of personal property
and assets. For example, most states allow
you to retain household furnishings, clothing,
pensions, and money in retirement accounts.
 So don't em pty yo ur retirement a ccou nts or sell
off personal possessions to pay debts unless
you're absolutely sure that you won't be filing
bankruptcy.
With bankruptcy, certain types of debts can be completely eliminated or
discharged. Debts that typically can be discharged include credit card,
medical, auto, utilities, and rent.
Debts that may not be canceled generally include child support, alimony,
student loans, taxes, and court-ordered damages (for example, drunk driving
settlements). Helen was an ideal candidate for bankruptcy because her debts
(credit cards) were dischargeable.
Helen also met another important criterion - her level of high-interest
consumer debt relative to her annualincome was high (100 percent). When
this ratio (discussed in Chapter 2) exceeds more than 25 percent, filing
bankruptcy may be your best option.
Eliminating your debt also allows you to start working toward your financial
goals. Depending on the amount of debt you have outstanding relative to
your income, you may need a decade or more to pay it all off. In Helen's
case, at the age of 48, she had no money saved for retirement, and she was
increasingly unable to spend money on her children.
Filing bankruptcy offers not only financial benefits but emotional benefits,
as well. "I was horrified at filing, but it is good to be rid of the debts and
collection calls - I should have filed six months earlier. I was constantly
worried. When I saw homeless families come to the soup kitchen where I
sometimes volunteer, I thought that someday that could be me and my kids,"
says Helen.