How to Avoid Losing Property During Bankruptcy
In bankruptcy, the question is especially acute – will they take away the apartment or not. The procedure provides for writing off the borrower’s debts if he is no longer able to pay them. In this case, the requirements of creditors must be satisfied. This means that a bankrupt will pay for his debts with his own property.
Whether or not the only housing is preserved during the bankruptcy of an individual is an ambiguous question. You can hire a good Chapter 7 bankruptcy lawyer to help you in your case. In this article, we will look at how you can avoid losing your property during bankruptcy.
What can you lose in bankruptcy?
Bankruptcy is the only legal way to get rid of debt, and the surest way to save the debtor’s property is to avoid bankruptcy. All immovable property of the debtor is included in the bankruptcy estate and is subject to sale at auction.
The law stipulates that in the event of bankruptcy, you can lose the debtor’s funds and assets, furniture and household appliances more expensive than a set amount, luxury goods, expensive clothes, a car, real estate, and the right to claim it (participation agreement), land, garage, cottage, etc. In the event of bankruptcy, personal belongings, toys, children’s clothing, household items, tools for earning money, and other similar property cannot be seized.
How to save your property during bankruptcy
- Before the bankruptcy procedure, the debtor can sell the property or apartment to a familiar person. However, it is important to understand that in this case, there is still a risk of invalidating such a transaction: for example, if the court establishes that the debtor lives in the sold apartment, the transaction was made between close relatives, the non-market sale price, etc.
- As part of the bankruptcy procedure, it remains possible to negotiate with creditors on debt restructuring on more benign terms. If the real possibility of repaying the debt according to the agreed schedule is confirmed, the court is more likely to approve such a procedure.
- If the property or apartment will also be the only housing for the debtor’s spouse and children, including shares allocated to them in ownership, the likelihood of its withdrawal is also significantly reduced.
Is it possible to keep your house only?
An exception to the property included in the bankruptcy estate is the only house, apartment, or premises where the debtor and his family are registered and live if there are no other residential real estate objects in the ownership.
If there are two or more residential properties owned by the debtor, the court considers the interests of the debtor and his family members when determining property for sale.
Under what conditions can you lose all property
The only property purchased with a mortgage that is not paid off at the time of the bankruptcy proceedings is included in the bankruptcy estate and is subject to sale regardless of who lives there. In this case, if the apartment is sold, the rest of his family members will be paid money for their shares in the apartment.
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