Bankruptcy Lawyer Washington DC

It is amazing how many clients who call my office who think that when they file for bankruptcy that they will somehow give up everything they have.  This is simply not true.  In fact, each state allows the debtor a certain dollar value of property to keep even though they are filing for bankruptcy.  In fact, in many cases, my clients keep all of their property, even though they have wiped away all of their credit card debts.

Your House

This is truly amazing!  If your home is located in Washington DC and you have lived in that home for more than 40 months, then you may keep up to $125,000 of equity in your house.  That means that if you have $125,000 or less in equity in your house, you can keep your house even though you are filing for bankruptcy.  If your equity is above $125,000 you are still due the equity on the house.

Let’s learn this by way of example:  Let’s say your house is worth $300,000 and you have a $200,000 mortgage still on the property.  That means that you have $100,000 of equity in your house.  This means you could file for a chapter 7 bankruptcy in Washington DC, and you could keep your house.  Of course, you will have to keep current on the mortgage,otherwise the bank could foreclose on your house.  But as long as you keep current, you could wipe away all of your other unsecured creditors like your credit card creditors.

If you have over $125,000 of equity in your house.  The bankruptcy trustee could sell your house, give you the equity up to $125,000 and distribute whatever is left to the creditors you are wiping away in bankruptcy.  Often times, unless there is a lot of equity, it is not worth the time and expense for the bankruptcy trustee to sell the house to distribute a minimal amount to the creditors .

Your Car

You can exempt up to $2,575 of equity in one car that you own.  That means if you have a car that is roughly worth $3,575 or less and you own it free and clear then you can keep it even though you are filing for bankruptcy, wiping out your debts.  Furthermore, even if it was worth $4,000 you could probably still keep it because the cost of the bankruptcy trustee seizing the property, selling it, paying you the exemption amount of $2,575 and distributing the rest to creditors may just be too cost prohibitive.

If you have financing on your car, then we would of course subtract that from the value of the car to arrive at your equity.  For instance, if your car is worth $7,000 given its mileage and condition today, and you have $4,000 left on financing on the car, then you would have $3,000 of equity in the car.  Since the exemption amount for the car is $2,575, only that amount is exempt.  However since only $425 is unexempt, the bankruptcy trustee will probably not go through all of the trouble of selling your car just to distribute $425 to your creditors.

Your Jewelry

You can keep up to $1,225 of value in jewelry that you own.

Your Retirement Accounts

I counsel my clients as soon as possible not to draw down on their retirement accounts to pay for debts that could be wiped away in bankruptcy.  Why?  Because if you are planning on filing for bankruptcy then you could wipe away most of your debts while still maintaining almost all of your retirement accounts.  The actual exemption amount is $1,095,000 per person.  This is a ton of money that one could retain if it is part of a 401K or IRA and still file for bankruptcy, wiping out your debts.

Household Goods

A debtor can keep up to $8,625 in equity of household goods, as long as no single item exceeds $425 in value.

The List Goes On

There are a number of other exempt property and amounts that I have not included here.  But rest assured, when you call my office we will do our very best to use the bankruptcy code and exemptions to protect you and your property in bankruptcy.

If you would like a free over-the-phone consultation, where I will hear your financial situation, tell you whether you qualify for bankruptcy, and what property you can probably keep, please give me a call now at (202) 540-9224.