Assets & Bankruptcy
- Whether or not you lose your house as a result of bankruptcy depends upon the type of bankruptcy you file, the value of your house and your state of residence. As of 2011, Texas residents could keep all of their homestead equity regardless of bankruptcy status, according to Bankruptcy Action. On the other hand, people living in South Carolina could keep only up to $53,375 of real estate equity. Residents of Nevada could preserve up to $550,000 of homestead equity.
- Your retirement accounts including IRAs and 401k plans are safe from creditor seizure during bankruptcy unless you committed some act of fraud to fund such accounts, according to the book "How to File for Chapter 7 Bankruptcy." If you file Chapter 7, creditors cannot demand your future tax refunds. However, if you elect a Chapter 13 debt repayment plan court officials can require you to pledge all or part of your next three to five tax refunds toward creditor repayment. Your basic personal possessions are safe during the bankruptcy process unless you have excessive electronics, a lot of jewelry or committed fraud to secure such possessions.
- If you leased or financed a vehicle and file Chapter 13 bankruptcy, you can usually keep it so long as you make future payments on time. Chapter 7 filers risk losing such vehicles unless a bankruptcy judge allows them to "reaffirm" the loan and resume payments. If you own a car outright, your state of residence determines whether you can keep it. As of 2011, Nevada residents could preserve up to $15,000 of motor vehicle equity, while people living in Illinois could only keep up to $2,400 in motor vehicle value.
- If you recently received or expect a personal injury award, you may not want to file bankruptcy right away. Some states such as Illinois allow you to keep up to $15,000 of personal injury awards, according to Bankruptcy Action. Other states treat them as cash assets and may demand they be used to repay medical bills and in some cases credit card accounts.