24 Jun What will happen to my property ownership after filing bankruptcy?
Q. What will happen to my properties after I file bankruptcy?
A. When you file your bankruptcy papers, a bankruptcy estate is created that is administered by the trustee designated by the U.S. Department of Justice. The trustee is the representative of all your creditors in the process. While the bankruptcy process is in progress, he takes control of all the property in your bankruptcy estate. However, the trustee won’t actually take physical control of the property. Most, if not all, of your property will be exempt, which means the trustee will return it to your legal possession after your bankruptcy is closed. If you have any questions about dealing with property after you file, ask a bankruptcy attorney.
Q. What will I do with my property while the bankruptcy case is pending?
A. While your bankruptcy is pending, do not throw out, give away, sell, or otherwise dispose of the property you owned as of your filing date – unless and until the bankruptcy trustee says otherwise. Even if all of your property is exempt, you are expected to hold on to it, in case the trustee or a creditor challenges your exemption claims.
Q. I have a piece of land that is not allowed in my total exemption. What will I do with it?
A. If some of your property is non-exempt, the trustee may ask you to turn it over. Or, the trustee may decide that the property is worth too little to bother with and abandon it. Typically, the trustee doesn’t let you know that property is abandoned, but once you receive your discharge, the property is deemed abandoned.
Q. Can I spend the money that I included in my filing as I declared in Schedule B?
A. You are allowed to spend cash you had when you filed and you declared in Schedule B to make day-to-day purchases for necessities such as groceries, personal effects, and clothing. Just make sure you can account for what happened to the cash.
If you have a huge purchases reflected in your bank statements, be sure to account and explain it to your trustee in case you are asked for it.
Q. Who owns the income I earned and the property I acquired after filing bankruptcy?
A. In Chapter 7 cases, with few exceptions, the trustee has no claim to property you acquire or income you earn after you file. You are free to spend it as you please. The exceptions are: property from an insurance settlement agreement, or inheritance that you become entitled to receive within 180 days after your filing date.
Note: This is not a legal advice and you need to speak to an attorney about your personal circumstances.