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The 3 Categories of Assets in a Bankruptcy Case
Jun 29, 2021
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During bankruptcy, understanding what's at stake and what you may be able to keep is vital for all debtors. This means that before you make any decisions about which chapter of bankruptcy to use, whether to exempt assets, or what loans to reaffirm, you should first know what actually make up your assets and how they affect your case. Use this guide to learn more about the three types of bankruptcy assets.
1. Personal Property Personal property is all around you, and it includes things both large and small. It's basically everything you own that you can touch - including furnishings, clothing, books, collections, computers, mobile devices, books, jewelry, guns, cars, and household goods.
Technically, all personal property a debtor owns when they file for bankruptcy is generally considered part of the case and could be used to pay debts. However, much of your personal property can be exempted under both state and federal rules. For instance, Georgia law allows you to exempt up to $500 in jewelry, so many people wouldn't have to lose their wedding rings even if these are part of the case.
What if your jewelry collection is valued at more than the $500 exemption? Both state and federal rules generally allow wildcard exemptions that can be used to boost the exempted value of anything you wish - from your wedding rings to your trading card collection to your car.
2. Real Property Real property is another term for real estate. For most Americans, the largest asset they own is their primary residence. But some debtors may have a rental property, a piece of inherited land, or a vacation cabin.
As with personal property, you can exempt a portion of the value of your primary home. This is generally known as the homestead exemption, and it varies by state and in federal rules. The Georgia homestead exemption is $21,500 (if the home is in your name only).
The homestead exemption may not sound like a lot in comparison to home values, but it represents only the portion of its value that is in equity. Equity is the difference between what the property is worth on the market and what you owe to others for it. So if your home could sell for $300,000 but you still owe $250,000 to the mortgage company, the equity you need to exempt is just $50.000.
Other real property is often not easily exempted, and you may need to use wildcard exemptions or other means to do so.
3. Intangible Property Finally, do you have intangible property in your case? Most Americans do, although they may not realize all of it. Intangible property are assets that cannot be touched. They commonly include retirement accounts, bank accounts, stocks and bonds, whole life insurance policies, royalties or rights, stakes in a business, and tax refunds.
Gathering information on all your intangible property can be complicated. For instance, many people overlook the cash value of their whole life insurance policy. And determining a value for some business interests often requires outside evaluation.
The good news is that, as with other types of property, intangible property can be exempted under bankruptcy rules. Each state approaches this subject differently, but most states and the federal rules exempt some or all of your retirement accounts, personal injury damage awards, and public benefits. Specific lists of intangible asset exemptions also address less common items.
To ensure you approach the protection of all your assets in the right way, the best place to begin is a consultation with a qualified bankruptcy attorney in your state. They will help you assess your personal, real, and intangible property to see how it is automatically protected through exemptions, where you have exemption options, and what you may want to let go of.
Georgia residents can trust the bankruptcy team at Custer Custer & Clark LLC . Call today to make an appointment and get the answers you need.
1. Personal Property Personal property is all around you, and it includes things both large and small. It's basically everything you own that you can touch - including furnishings, clothing, books, collections, computers, mobile devices, books, jewelry, guns, cars, and household goods.
Technically, all personal property a debtor owns when they file for bankruptcy is generally considered part of the case and could be used to pay debts. However, much of your personal property can be exempted under both state and federal rules. For instance, Georgia law allows you to exempt up to $500 in jewelry, so many people wouldn't have to lose their wedding rings even if these are part of the case.
What if your jewelry collection is valued at more than the $500 exemption? Both state and federal rules generally allow wildcard exemptions that can be used to boost the exempted value of anything you wish - from your wedding rings to your trading card collection to your car.
2. Real Property Real property is another term for real estate. For most Americans, the largest asset they own is their primary residence. But some debtors may have a rental property, a piece of inherited land, or a vacation cabin.
As with personal property, you can exempt a portion of the value of your primary home. This is generally known as the homestead exemption, and it varies by state and in federal rules. The Georgia homestead exemption is $21,500 (if the home is in your name only).
The homestead exemption may not sound like a lot in comparison to home values, but it represents only the portion of its value that is in equity. Equity is the difference between what the property is worth on the market and what you owe to others for it. So if your home could sell for $300,000 but you still owe $250,000 to the mortgage company, the equity you need to exempt is just $50.000.
Other real property is often not easily exempted, and you may need to use wildcard exemptions or other means to do so.
3. Intangible Property Finally, do you have intangible property in your case? Most Americans do, although they may not realize all of it. Intangible property are assets that cannot be touched. They commonly include retirement accounts, bank accounts, stocks and bonds, whole life insurance policies, royalties or rights, stakes in a business, and tax refunds.
Gathering information on all your intangible property can be complicated. For instance, many people overlook the cash value of their whole life insurance policy. And determining a value for some business interests often requires outside evaluation.
The good news is that, as with other types of property, intangible property can be exempted under bankruptcy rules. Each state approaches this subject differently, but most states and the federal rules exempt some or all of your retirement accounts, personal injury damage awards, and public benefits. Specific lists of intangible asset exemptions also address less common items.
To ensure you approach the protection of all your assets in the right way, the best place to begin is a consultation with a qualified bankruptcy attorney in your state. They will help you assess your personal, real, and intangible property to see how it is automatically protected through exemptions, where you have exemption options, and what you may want to let go of.
Georgia residents can trust the bankruptcy team at Custer Custer & Clark LLC . Call today to make an appointment and get the answers you need.
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