I have a 401(k) retirement plan and a pension from the corporation I used to work in. All of my assets are located in Massachusetts, also my sources of income. Will my pension and four await 1K be exempt from liquidation in Chapter 7 bankruptcy? Will my home and auto be exempt in Chapter 7 bankruptcy if I file?
When you file a Chapter 7 bankruptcy, or what is otherwise known as liquidation bankruptcy, the bankruptcy court may liquidate certain assets or monies you have. Your question as pertaining to your retirement 401(k) plan and the pension from the company you work for, will both be considered exempt under Chapter 7 bankruptcy. To answer your question about your home and auto, I will need a little more information. Since your home and auto are collateral that suits your a debt, meaning these unsecured debts, the mortgage and loan must be up to date for you to be able to retain this property if you go through a Chapter 7 bankruptcy. If your home or automobile are completely paid off, then you will have to check the amount of the value of the property against the state allowed exemption for the property. State allowed exemptions in Massachusetts are much better than the federal exemptions for a home and automobile. But if you still have a mortgage or loan, and they are up to date, you’ll be able to retain the property after filing a Chapter 7 bankruptcy, all you need to do is keep making the normal monthly payments. As a strategical endeavor, my Lawoffice usually writes off these debts in a Chapter 7 bankruptcy and you simply continue to pay on the debt. The reason for this is after you file bankruptcy, you cannot file for another eight years and if something happens to you financially you will not be able to observe yourself of the financial burden of the mortgage or automobile loan. But even if you discharge the debt from the mortgage or automobile loan, as long as you keep making the normal monthly payments you will still be able to retain the property. That’s because bankruptcy only discharges your duty to pay the debt, but does not remove the security interest in the collateral, in this case a home in an automobile. This way if in the future you fall on hard times and cannot make you normal monthly payments, you can either walk away from the home or the automobile and not have to warrior about paying off the difference of the auction sale price and the amount remaining on the loan.
Joseph F. Botelho, Esq.
BOTELHO LAW GROUP
Attorneys At Law
901 Eastern Ave.
Fall River, MA 02723
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