If you stand to lose property that is important to you, you must obtain court approval for your bankruptcy case to be dismissed. In a Chapter 7 bankruptcy, the trustee sells the non-exempt property and uses the proceeds to repay your creditors. Yet conflict often arises when one files for bankruptcy assuming he will be able to hold onto certain property only to learn the trustee plans to sell it.
The issue of dismissal
The unfortunate truth is people do not have the absolute right to dismiss a Chapter 7 bankruptcy. They must obtain court approvall. When an individual person files a Chapter 7 bankruptcy, all or just about all of the individual’s property is part of the bankruptcy estate. In a legal context, this means the bankruptcy trustee is provided with control over the debtor’s property.
As a result, the trustee will likely sell non-exempt property and use the profits to repay the creditors.
A look at exempt property
Some types of property are exempt from the trustee’s ability to liquidate. This means the trustee can’t sell the protected property. The state and federal bankruptcy laws specify certain property one can keep. a debtor can hold some of this exempt property, regardless of its worth. Other property is exempt up to a certain value. Common examples of exempt property are a vehicle, an engagement ring and furniture.
When in doubt, lean on a Riverside bankruptcy attorney to help plan a bankruptcy strategy. A Riverside attorney has the in-depth knowledge of the bankruptcy process necessary to properly plan a bankruptcy to advance the financial interest. Prior to filing, your case, an attorney will help pinpoint your exempt property as well as property that the trustee might sell.
A trustee who plans to sell
It is extremely important to understand exemptions. Otherwise, you may lose your property after filing bankruptcy. However, if this occurs, the debtor can consider dismissing his Chapter 7 bankruptcy.
Is dismissal an option?
If one decides to keep property following the filing for bankruptcy, dismissing the bankruptcy is a potential option. However, a debtor who files a Chapter 7 bankruptcy does not have a guaranteed right to have the case dismissed. The bankruptcy court must hold a hearing to determine if there is an acceptable reason, known as “cause,” for the case’s dismissal. The simple desire to stop a trustee from selling property is not sufficient reason for a dismissal.
The trustee and court examines the debtor’s property to determine if non-exempt assets exist. The court may demand an explanation as to why the Debtor is requesting dismissal. The court then reviews the case to determine if creditors would be harmed in the event of a dismissal. If the case is subsequently dismissed, the debtor must show the court he has another means of paying the creditors.
NOTE: This is for informational purposes only and does not constitute legal advice.