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Bankruptcy Exemptions – Three Years After Filing For Bankruptcy

Bankruptcy, in its simplest form, is an action by an individual, company or government authority declaring that it has no longer any capacity to meet its financial obligations and is unable to cover its expenses. The term is also used in bankruptcy proceedings and in common law jurisdictions. The purpose of bankruptcy is to provide debtors with an opportunity to begin repayment of debts in an orderly fashion. Once bankruptcy is filed, it will remain on record for up to seven years.

If you are in need of credit counseling or bankruptcy advice, an experienced bankruptcy lawyer is the best resource. Bankruptcy lawyers are experienced in negotiating with creditors and getting results that benefit you and your family. While filing for bankruptcy does not mean that you are without assets, the reality is far different. Most creditors will be happy to know that you have a means of paying back what you owe them because they will then be able to receive a portion of their losses. However, if you do not have any assets to offer in settlement, you may not have any resources to offer in a lawsuit against your creditors. An attorney can give you advice as to how to best proceed with your bankruptcy case.

In some jurisdictions, bankruptcy stays on your public record for up to three years. If you file for chapter 11 bankruptcy in Florida, for example, the statute of limitations for this crime is three years. Chapter 7 bankruptcy, on the other hand, is considered less severe and the crime is declared void after three years. Therefore, if you are declared bankrupt in a state with three years’ statutes of limitation, you may not be able to get any assets from your creditors until three years after the date of your bankruptcy declaration.

Once you are declared bankrupt, you are not legally discharged from all of your debts. Debts are discharged only when the amount of the debt is more than ten thousand dollars. Even then, it is not absolute. The court may still allow some of your debts to remain. It is important to remember that you still owe the creditor’s money, whether you are bankrupt or not.

The bankruptcy exemptions that are set forth by your bankruptcy court are intended to help you prevent creditors from harassing you while you are in bankruptcy. This helps you from being forced into making agreements with third parties in order to avoid creditor calls. However, you should understand that the bankruptcy exemptions are merely suggestions and that they are not enforceable in all circumstances. For example, if you sell your home before you become bankrupt, you will be unable to prevent creditors from coming to take the property (even if they cannot collect against it).

One possible exception to the bankruptcy law that would allow you to exempt household furnishings is the car exemption. You are allowed to use your automobile to pay for necessary household expenses during your bankruptcy. However, if you end up repaying the loan to the lender using the automobile as collateral, you face the risk of losing the car if you should default on the loan. Another possibility is to use other property as collateral, such as a second home or life insurance coverage. If you should lose your house or other property to repay your auto loan, you could lose your home and your life insurance policy, which are considered to be very valuable.

An additional exemption for household furnishings is found in the chapter 7 case of the bankruptcy law. It says that you may use real estate purchased during the period when you are filing for bankruptcy, but only if it can be sold at a “revenue-evidenced cost”. So, real estate purchased during the filing of the bankruptcy does not include items such as a home or land that you may live in immediately after filing. However, property that you may use in the future does not need to be revenue-evidenced. Real estate that is used for vacation homes or rental properties may be exempted, though.

The last category of exemption is for student loans. The bankruptcy code states that you cannot include student loans in the debts you have filed as a result of the bankruptcy, even if you are no longer in school. Student loans are considered unsecured debts and as such they fall outside the purview of the bankruptcy code. Student loans can be discharged in a two-pronged action, so make sure that you contact an attorney if you are having trouble qualifying for discharge of these debts.

Peter Berry
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