While bankruptcy provides relief from overwhelming debts, it also requires disclosing and potentially surrendering some of your assets. Having an experienced bankruptcy lawyer advise you on the best ways to protect your property and valuables during the bankruptcy process is crucial. A key strategy bankruptcy lawyers recommend is taking full advantage of exemptions of the assets a person is allowed to keep, free from liquidation. Exemption laws vary by state but generally include a portion of the equity in your home, car, household furnishings, retirement accounts, life insurance, and more. Your lawyer will inform you of exemption amounts and help ensure you claim the maximum. Utilizing all available exemptions allows you to hang onto essentials.
Shield retirement funds
Retirement accounts are frequently exempt, but it helps to consult your Jacksonville Bankruptcy Lawyer, as the laws differ by plan type. For instance, 401(k)s usually enjoy greater protection than IRAs. If you have discretionary contributions available, maximize them leading up to filing to shelter more funds. Work with your attorney to shield retirement assets to the fullest extent.
For married couples filing jointly, make sure your home is titled as tenancy by the entirety, which makes it fully exempt. If not, consider adding your spouse to the title to convert it. Consult your lawyer to see if transferring the title beforehand could be an issue. Pay down your mortgage principal to build more equity protected under homestead exemption laws.
Liquidate non-exempt assets
Speak to your attorney about assets that won’t be exempt in bankruptcy. Consider liquidating luxury items like boats, jewelry, art, or collectibles and using the proceeds to pay down debts or purchase exempt assets. Gifting non-exempt assets to trusted friends or relatives is risky, as the court may see it as concealing assets. Your lawyer can advise if any assets are worth liquidating. If you own a non-exempt property you want to keep, like a vacation home, talk to your attorney about the timing. Selling it right before filing may appear as concealment.
Shield business assets
If your business is structured as an LLC, corporation, or partnership, those entities are distinct from you as an individual. Keep business banking and accounts segregated from personal to protect business assets. Consult your attorney on the best corporate structure to shield assets. If you have substantial equity in a vehicle beyond your state’s auto exemption amount, one option is to trade it in for a less expensive model and use the leftover funds to pay down your auto loan principal. It reduces the non-exempt portion of your car asset.
Create a bankruptcy-remote trust
For maximum asset protection, your lawyer may recommend setting up an irrevocable trust long before filing, so the trust assets are not considered your property. A trustee oversees assets like real estate or a business. looking for a bankruptcy lawyer in Jacksonville to see if a trust aligns with your situation. Meticulously document all belongings, valuables, property deeds, and account statements. Your lawyer will need full details on all assets. Thorough records allow exemptions to be applied methodically. Never attempt to transfer ownership of an asset to evade creditors or the trustee.