Bankruptcy is something people only seek out when they’re at their wit’s end. Although some fear it’ll take everything from them, the reality is: that bankruptcy does have its limits on what it can take.
This is a rundown on what you won’t have to give up: what debts will remain with you.
What Debts Won’t Be Removed
Before we get into what bankruptcy can’t take from you, it’s a good idea to know what debts and financial burdens it won’t be able to remove. Bankruptcy can’t prevent a secured creditor from foreclosing or repossessing a property you can’t currently afford. Although it eliminates debts, it doesn’t eliminate liens. This means that the lender can take the property, sell it at auction and then apply the proceeds to the loan balance.
Your bankruptcy doesn’t free you of alimony or child support obligations, making these into charges you’ll still need to pay off to get your credit score to eventually rise.
Bankruptcy also doesn’t eliminate student loans in most circumstances or tax debts. These are still debts you’ll have to pay for unless you can show that repaying the loan would cause you “undue hardship,” which you would need a bankruptcy attorney for.
Your Furniture Is Safe
Your furniture is vital to you enjoying comfortable life and being able to resume it with dignity after bankruptcy. None of your furniture will be taken from you as long as it’s in your home and was designed to be furniture.
Your Home Is Safe
As long as you don’t have a lien against your home and you can afford to pay for it every month, bankruptcy won’t take your home from you. A large part of rebuilding your financial situation is having a safe place to live.
Your Car Is Safe
Your primary vehicle is safe. If you have other vehicles that can be proven to just be for luxury or as a collector’s piece, those might be an asset that could be taken from you, but it depends on the situation.
Your Professional Tools Are Safe
Whatever tools you have for your job and livelihood are safe. You don’t have to worry about losing the computer that you use for work or having your expensive machinery taken away if you run a printing press.
Your Retirement Accounts Are Safe
This is something most people don’t realize: but your retirement accounts are safe. These won’t be taken from you, and you can keep paying into them. If you liquidate them before you go into bankruptcy, though, that could be taken away, so it’s better to keep the funds in your bank account.
Why Choose Bankruptcy?
Although it’s scary and can change your life through credit score and asset seizure: bankruptcy can still be the answer for plenty of people. Consider your financial situation, talk to a legal professional who knows what they’re doing, and you’ll be able to come out better on the other side.
Bankruptcy Isn’t There to Take Everything From You.
Although some may fear that bankruptcy is the end of homeownership: it’s not. As long as you continue to pay off your home and cars, you can keep them, along with multiple other things.