Bankruptcy clients commonly ask us what happens to assets when filing bankruptcy. When you file bankruptcy, you will hear the phrase “property of the estate” a lot. This means that everything you have a legal or equitable interest in as of the date you file your petition will belong to the bankruptcy estate. See U.S. v. Whiting Pools. If you have assets that are property of the estate, you run the risk of being forced to liquidate the assets in Chapter 7. Therefore, you should consult with a bankruptcy attorney before taking legal action. Bankruptcy can be very helpful but it requires careful planning and knowledge of bankruptcy law. A bankruptcy attorney in Tampa can help you get the most relief possible while protecting your assts.
What Happens to Assets When Filing Bankruptcy – Equitable Interest
What happens to assets when filing bankruptcy if you do not possess the asset? Even if you do not physically possess a piece of property that you own at the time you file your petition.For example, your sister uses a vehicle that you own outright and you never drive it, that asset may still be property of the estate, even though you do not physically have it any longer. Another example of something you may have a legal or equitable interest in as of the date you file your petition, is if you work pre-petition (meaning before you file bankruptcy), and you earn that income post-petition (after you file your petition), that income is property of the estate and belongs to the trustee because you had legal and equitable rights to that income prior to filing your petition.
Property of the Estate
Determining which assets may be considered property of the estate in a Chapter 7 or Chapter 13 case requires careful consideration. It is highly recommended to consult with a bankruptcy attorney in Tampa before taking action. Failure to properly plan for your bankruptcy may have devastating consequences. For instance, if you were to file Chapter 13 bankruptcy, everything you purchase post-petition will be property of the estate because the whole point of Chapter 13 is to bring in post-petition assets to help reorganize and repay your debt.
In either a Chapter 7 or 13, if you inherit money within 6 months after filing your bankruptcy petition, that money becomes property of the estate as well and you may not have a right to keep it. However, there are several items that never become property of the bankruptcy estate and you get to keep. These items include: funds in an individual retirement account, no later than 365 days before the filing of your petition; employee benefit plans; health insurance plans regulated by state law; any interest you may have as a lessee under a lease of nonresidential property; deferred compensation plans; and tax-deferred annuity.
Also, if you work post-petition and earn income post-petition, that income you earned is not property of the estate; you get to keep it. See bankruptcy law 11 USC 541. For more information on what happens to assets when filing bankruptcy contact a bankruptcy law firm in your area.
Bankruptcy Law Firm in Tampa
If you are having a difficult time meeting your financial obligations Florida Law Advisers, P.A. may be able to help. Florida Law Advisers, P.A. is a customer service based law firm committed to providing personalized attention and dedicated legal counsel. Our Tampa bankruptcy lawyers have years of experience helping people just like you solve their financial problems and obtain a fresh start. For a free, initial consultation contact us today at 800 990 7763 or complete the free case review inquiry.