Retaining assets in bankruptcy

Some residents of Minnesota may wonder what creditors are allowed to take when an individual files for bankruptcy. Although bankruptcy laws may vary in each state, there are some issues that should be considered in order to avoid problems.

When an individual files for Chapter 7 bankruptcy, a trustee is appointed to administer it. The bankruptcy trustee oversees the case and might look for certain unfavorable or allegedly fraudulent behaviors, such as trying to hide assets by putting the assets in another person's name.

Transferring assets in an attempt to hide them may remove those assets from protection under bankruptcy law. In addition, not disclosing all assets might create potential problems. An individual who is expecting an inheritance or is named as a beneficiary in a trust must disclose that information. Furthermore, seeking large amounts of money through cash advances prior to filing may be considered fraudulent. In this case, the debtor may be forced to pay back a portion of the withdrawn funds.

Other situations, such as being involved in a lawsuit, must be noted when the individual files for bankruptcy. Lawsuits, since they have a potential for monetary gain, must be listed as an asset. States differ in terms of a debtor filing for bankruptcy immediately before a home undergoes foreclosure. Knowing the statutes can be important if this is an issue.

Personal bankruptcy may be a way in which an individual who is overwhelmed with debt might seek make a new start. A debtor contemplating bankruptcy may wish to consult with an attorney about the assets that they are allowed to retain and the necessary paperwork needed for the filing. The attorney may assist the individual by helping the debtor prepare a list of assets that is complete and acceptable to the bankruptcy court.

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Prescott Pearson & Tande, PA
443 Old Highway 8 Northwest, Suite 208
New Brighton, MN 55112

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