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What could creditors take during bankruptcy?

You have a strong feeling that filing bankruptcy could offer the financial peace of mind you deserve, but you worry about what you may give up in the process. You know your creditors may have a claim to some of your assets once you file, but which ones?

Bankrate breaks down items you may lose and ones you may keep after declaring bankruptcy. Learn what to expect for life after bankruptcy.

Assets on the table

For bankruptcy, you have a bankruptcy estate of real estate and income that creditors have the right to take. For instance, all your earned income and real estate you own when you file become part of the estate. Even owed income coming to you in the future goes into the bankruptcy estate.

Additionally, if you anticipate receiving an inheritance or a divorce settlement, both become assets creditors may take from you. Do you expect to receive a tax refund? It could go toward paying off your outstanding debts.

Creditors also have a right to any of your debt repayments totaling at least $600 and made within 90 days of declaring bankruptcy. The same applies to $600 repayments made to family members or friends in the last year before you filed.

Assets off the table

Your home, car, retirement accounts and furniture remain out of creditors’ grasp during bankruptcy, as does any equipment or tools you need to earn a living. State and federal exemptions have a dollar limit, and you must follow specific regulations to take advantage of them.

You may have to give up possessions you love during bankruptcy, but you cannot lose everything. By understanding exemptions and their limits, you may help ease your anxiety about the future.


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