Bankruptcy Exemptions (Protecting Assets)
Everyone filing for bankruptcy has assets to some extent, even if the assets are only clothing, a few household items, a vehicle and a bank account. It is absolutely necessary when filing for bankruptcy to disclose all assets, and it is vital for the Washington and Tacoma bankruptcy exemptions attorney to ask many questions to make sure that all of the assets are listed in the bankruptcy schedules. Assets include obvious items such as vehicles, a house, bank accounts, cash and other personal items.
Assets that that are less obvious but which also must be disclosed when the case is filed include a personal injury claim or other claim, even if you haven’t hired a lawyer yet or taken any action in making a claim, and even if you are not sure if you will even pursue the claim. If you fail to list a potential claim, there can be serious consequences. When you pursue the claim, the at fault party’s insurance company can seek to dismiss the case on the basis that you failed to list the claim in the bankruptcy schedules, essentially arguing that you are taking inconsistent positions, on the hand pursuing the claim in a state court lawsuit and on the other hand not listing the claim in the bankruptcy schedules. Failing to list the claim can also cause the US Trustee’s office to seek to vacate the Order of Discharge, and criminal charges for bankruptcy fraud may also be possible. All claims need to be disclosed to your Tacoma bankruptcy exemptions lawyer, such as motor vehicle personal injury claims, slip and falls, medical malpractice, medical device and any other claims.
The bankruptcy filing creates what is known as a “bankruptcy estate” which includes all of your assets and possible claims. I like to describe it as a photo “snap shot” of all assets at the moment of the bankruptcy filing. For instance, if you have $1,100 in a bank account at the moment of filing, then the bankruptcy schedules need to list that specific bank account with that dollar amount. If you have $2,000 in cash when the case is filed, the schedules need to state that amount. The one exception to this rule is inheritance, which includes inheritance up to 180 days after the case filing. This does not mean that you would receive the actual inheritance within 180 days. It means that someone died within 180 days after the bankruptcy filing which triggered a right to receive inheritance, even if it takes years to receive the actual inheritance.
Since all of your assets go into the bankruptcy case and encompass the “bankruptcy estate”, it is important to be able to provide for a bankruptcy exemption of those assets. The bankruptcy exemptions are based upon state and federal statutes. You do not get to pick and choose between state and federal statutes. In Washington, you must choose either the federal exemptions or the Washington state exemptions (when choosing Washington state exemptions, you also can use federal non-bankruptcy exemptions to protect property). It is vital to fully analyze the bankruptcy exemptions before the case is filed because it is the bankruptcy exemptions that protect your property. If you are not able to exempt the property, a chapter 7 bankruptcy trustee may liquidate the asset. In a chapter 13 case, there will be a “liquidation analysis” to determine the amount of the non-exempt assets and you must propose a plan that pays what is known as “general unsecured creditors” no less than that amount.
If you call my law office, one of the first questions I am going to ask is whether you own real property or any other significant assets. You may be able to fully protect all of your assets in a bankruptcy case, even if you have substantial equity in a home. As a Washington and Tacoma bankruptcy exemptions lawyer, I look at each particular situation to figure out if bankruptcy is your best option and whether the case should be filed as a chapter 7 or chapter 13.