It can be pretty nice to suddenly come into some money through something like an inheritance or settlement. Though if your looking into bankruptcy, there are some things you should take into consideration before spending, saving, or investing this money.
During a bankruptcy, your assets become part of the bankruptcy estate. The bankruptcy court will then distribute all your non-exempt assets to your debtors. So, it is important to navigate the law in order to protect as much of your assets as possible in order to keep them from being distributed to creditors.
The law allows you to exempt several categories of assets, including up to $28,000 using a wildcard exemption. Though you might not be eligible for the wildcard exemption if you have a lot of equity in your home. Depending on your other assets, you could protect a modest inheritance or a decent sized settlement using a wildcard exemption. It’s important not to carelessly spend money you come into, as the court might require you to pay the money you spent to your creditors depending on how you spent it.
Depending of the kind of exemptions you use, you are also able to exempt a portion of some kinds of lawsuit settlement. Though this is starting to “get into the weeds” of the law and is beyond a scope of a blog post.
It’s vitally important that you have a sound strategy for protecting your assets when you are filing for bankruptcy. This is especially important if you have recently come into money or are expecting to come into money before your bankruptcy is discharged. I would recommend consulting an experienced bankruptcy attorney when creating this strategy. You’re more than welcome to give our office a call if you’re looking for a Modesto Bankruptcy attorney.
Categorized in: Assets