This is a common fallacy that I deal with every day. People come to me hesitant to disclose their assets (but they do, because they are honest people) afraid they will lose them.
Less than 1% of Chapter 7 cases in the Central District of California, where I practice, have assets sold in the case. Perhaps that is in part because my firm and other bankruptcy attorneys consult with would-be debtors who have non-exempt assets and warn them off. However, the larger reason is that California has fairly generous exemptions that along with good planning guided by your bankruptcy attorney makes the sale of assets unnecessary. In most cases it is not very challenging to protect your property, in a few cases it can be a little challenging. Yet you are very unlikely to lose any of your assets in a Chapter 7 case if you are insolvent.
While protecting your property is a concern, it is not a problem. Chapter 7 is often called the “liquidation chapter” but a liquidation of anything is rare in chapter 7. Only debtors who represent themselves or get especially bad counsel wind up losing their property unexpectedly.
Top 10 Myths About Bankruptcy
- Debt consolidation is as good as bankruptcy
- Everyone will know you filed bankruptcy
- You will never get credit again
- Filing bankruptcy will hurt your credit for 10 years
- Only deadbeats file for bankruptcy
- Your property will be sold by the bankruptcy trustee
- You have to hide assets to file bankruptcy
- It is expensive to file bankruptcy
- It is hard to qualify to file bankruptcy
- Taxes are not dischargeable in bankruptcy
