Chapter 13 Assets
Aurora Illinois Bankruptcy Lawyers & Attorneys
Jesse Barrientes: Let's talk about assets because that's very important. The bankruptcy trustee needs to know that and wants to know that and the Aurora bankruptcy attorney needs to know that in order to make a determination, in order to properly complete the voluntary petition for Chapter 13. So some of the things that you look at are just the basic things that make sense to everybody, which is gonna be – you know, how much do you have in your pocket. I can't tell you how many times people – they always put zero most of the time.
David Siegel: Right.
Jesse Barrientes: And –
David Siegel: Sometimes it is zero.
Jesse Barrientes: And sometimes it is zero. True enough. In their bank account it could be whatever it is. It could be maybe a higher amount but that's because they have to pay for the rent and pay their bills. And so at this particular time when they've come in that's what's in there. And so we go on down the list. They look at insurance. What happens if I have not term – term insurance is something I can't borrow against. But what happens if I have a whole insurance policy that I can liquidate and get $15,000 or $20,000? What's gonna happen with that?
David Siegel: Well, we can protect whole life insurance in either chapter of the bankruptcy. Chapter 13, for sure because you're repaying. And Chapter 7 we can protect it too provided that the beneficiary is a spouse or a dependent. So as long as the beneficiary is not a sister or a non-family member then the money would be exposed. But as long as it's a spouse or a dependent the cash value is protected.
Jesse Barrientes: When you say exposed you mean that the – if it were somebody other than those two they could liquidate it.
David Siegel: It could be liquidated in a Chapter 7 but in the case that we're talking about, Chapter 13, all of your property is protected because you're repaying your creditors. So you can keep equity in a home, equity in a vehicle. And even monies in the bank. You just have to pay back through a Chapter 13 at least what the creditors would get if you did a Chapter 7 liquidation. That's the key. I'll say it again. You have to pay back at least what the creditors would get if you did a Chapter 7 liquidation.
Jesse Barrientes: So that applies to when you go down the line, for example, my retirement, which is protected?
David Siegel: Retirement is protected under both chapters of the bankruptcy code so that would not be considered an asset. That would be protected under either chapter.
Jesse Barrientes: What about loans that maybe before I filed this Chapter 13 bankruptcy I took a loan out against my pension and – so now is that considered, you know, an unsecured debt that I can pay back 10 – or how does that work?
David Siegel: Well, if you take a loan against your pension, 401k or other retirement account, that's your own money that you're borrowing so you get to pay that back in full outside of the bankruptcy.
Jesse Barrientes: Outside of the bankruptcy?
David Siegel: Yes.
Jesse Barrientes: So it's not included in the bankruptcy.
David Siegel: Correct. It's not a creditor because it's your money that you borrowed against and you have the ability to repay it while you're in a Chapter 13 but you do it outside the 13. It's not part of your plan payment.
Back to Aurora Illinois Bankruptcy Lawyers & Attorneys
See Also:
Chapter 7
Misconceptions about Chapter 7
Life after Chapter 7 bankruptcy
Privacy is protected in bankruptcy
Household income qualifications
Converting Chapter 13 to Chapter 7
Converting Chapter 7 to Chapter 13
Chapter 13
Using Chapter 13 to save a home
Choosing Chapter 13 versus Chapter 7
Debt consolidation & late fees
Administrative fees & the bankruptcy trustee
Chapter 13 payment plan dismissal
