Probably the most common myth is that you will lose your house, car and other property during a bankruptcy. This is not true at all. There are many laws that protect certain property from your creditors. The state that you currently live in usually determines whether or not you can keep your property (real and personal) based on the property’s value.
As I discussed in a prior post, in Nebraska you can have up to $60,000 in home equity and still file a Chapter 7 bankruptcy without any risk to your home. In Iowa, if your home is on one-half acre in town or 40 acres or less out of town, your entire property may be exempt regardless of the equity or value of the property.
What about your pension, 401(k), or other forms of deferred compensation that both you and your employer have been contributing to for the last 15 years? For the most part, these funds are protected while they remain in this form so don’t cash them out if you think bankruptcy is on your horizon.
If it’s your vehicle that you are worried about protecting, again depending on the value and whether or not you still owe money on the vehicle, you will most likely be able to protect your vehicle as well. Especially with vehicles we often tend to assess a higher value to them based on what we paid for them or even how much they personally mean to us.
However, the truth is vehicles depreciate at a very high rate. Additionally, a detailed appraisal of your vehicle could prove that your car’s value is actually within the statutes limits. You may be surprised to find how the difference in the color of a car can actually change its resale value.
What about your clothes, your home possessions or even your wedding rings? For the most part, in both Iowa and Nebraska there are specific exemptions available for us to help you keep these items so you don’t have to worry about literally losing the shirt off your back.
At Husker Law we have been through this process and we can help you keep as many of your belongings as possible, while assisting you in discharging as many debts as possible. Come in and talk to us for a free, no-risk, initial consultation to discuss whether your property would be at risk in a bankruptcy.