Yes! Most debtors are under the impression that they will not be able to own anything, such as a home or car, for a long period of time after filing bankruptcy. It is too bad that this myth deters people that really need the Fresh Start that filing bankruptcy offers from filing because it is not the case.

Typically, a bankruptcy filer can keep their exempt property and anything they acquire after their bankruptcy is filed.

However, property settlements, inheritances or monetary benefits such as life insurance that are recieved by the bankruptcy filer within 180 days after filing for bankruptcy, may or may not end up having to be paid to thecreditors if the property or money is not exempt. To learn more, it is always recommended that you consult an experienced bankruptcy attorney.

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Debtor owns an appreciating asset- land, a business etc.- and files a Chapter 7 bankruptcy petition which assigns a low value to the asset which value is below the debtor’s exemption limits. The trustee does not challenge the value or the exemption within the trustee’s 30 day objection window. After the filing, and after the time for the trustee’s exemption challenge, the asset significantly increases in value. Is the debtor “home free”, or can the trustee go after the appreciated asset?

This issue was addressed by the U.S. Supreme Court in a cased decided in June. The Court held that the bankruptcy trustee could pursue an asset that appreciates after the petition filing. I read an excellent summary of this case in a blog post by Georgia bankruptcy attorney Jonathan Ginsberg. The post suggests that debtors with potentially appreciating assets might “claim an exemption for ‘full fair market value’ or 100% fair market value’”. This valuation might cover anticipated appreciation so that the trustee would have to appraise the asset and challenge the exemption within 30 days of the creditor meeting. On the other hand, using “fair market value” instead of a current number may invite attention to an asset that otherwise would pass through the bankruptcy even if it did appreciate after filing.

The best course of action will become clear after some cases apply the new Supreme Court ruling.

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Bankruptcy may not always be an avenue for complete tax debt forgiveness; however it may provide relief from levies and wage garnishments. The IRS and FTB can levy accounts and wages much easier and quicker than any normal creditor. Tax debt forgiveness through bankruptcy is a blessing to those who qualify.

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Bankruptcy laws in the United States are governed by federal government and the federal law bestows individuals, business and even towns and cities with a legal right to file bankruptcy. There are six important types of bankruptcies that one needs to know about if he/she is seeking to file bankruptcy. However, you must always remember that any kind of bankruptcy proceeding should only be the last resort and should only be considered when all other efforts of getting out of debt have not been of any use.

Chapter 7

Also known as liquidation bankruptcy, it can be declared by both individuals and businesses. Chapter 7 basically is meant to forgive all debts by analyzing the debtor’s situation. The debtor gains by getting shielded from any responsibility that require him/her to pay money but his other liquid incomes may get seized any time. It may also spoil a person’s credit-rating because of which he may not be able to exercise his social freedom at times.

Chapter 13

Bankruptcy under Chapter 13 is also known as Adjustment of Debts. It can only be filed by individuals who have a current reliable income and are capable of paying a portion of their income to settle the debt. This whole procession is carried in the supervision of court and the person also remains protected from unnecessary chase of creditors. It is a good option if you’re ready to settle your loans by not paying a high price of interest. Another advantage is the extra time you get for settling the loans. You also get to keep your liquid assets like bonds, jewelry etc. with you.

Chapter 11

Bankruptcy under Chapter 11 is filed by wealthy individuals, generally to belong to business class. The procession of bankruptcy is similar to that of Chapter 13 but in this case the court allows the companies and to recognize and detail their assessments so that a way to settle the debt can be found out.

Chapter 9

Bankruptcy under Chapter 9 is also similar to that of Chapter 13 and Chapter 11 but the chapter generally applies to municipalities that are considering redevelopment. A good example would be Orange country, California that had declared Chapter 9 in the year 1994.

Chapter 12

This chapter is reserved for fishermen and farmers. This allows reconstruction of debt and keeping a little amount of assets securely.

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