Investments, 401(k) Plans And Real Estate

Michigan Bankruptcy Exemptions And Real Estate Exemptions Attorney

The general question of what property can be kept during a Chapter 7 bankruptcy becomes more complex with regard to certain types of property. Investments, 401(k) plans and real estate holdings must be treated with care, to give the bankruptcy filer the best chance for a positive outcome with these types of assets.

At the Livonia, Michigan, law firm of Charles J. Schneider, P.C., we have been guiding clients through complex bankruptcy filings since 1997. Our founder and lead attorney has been a certified bankruptcy attorney since 1995. Before you take the formal step of filing for bankruptcy, we encourage you to consult our office for thorough and knowledgeable answers to your questions about property exemptions in Chapter 7 and Chapter 13 bankruptcy. Contact us online or call 734-237-1523 to schedule an appointment with a Livonia, Michigan, bankruptcy exemptions attorney.

Bankruptcy Exemptions And 401(k) Plans

Generally speaking, 401(k) plans are protected, which means the bankruptcy court cannot demand that 401(k) funds be used to pay outstanding debts. The problem arises when a bankruptcy filer has borrowed money from his or her 401(k) plan. Repayments on 401(k) loans are not viewed as debts in bankruptcy, because you have borrowed money from yourself. Thus, debt owed on a 401(k) loan is not dischargeable in Chapter 7 bankruptcy. Unfortunately, you cannot count 401(k) loan payments as part of deduction from your income as an expense demonstrating your inability to pay debts.

Bankruptcy Exemptions And Real Estate Investments

Real estate investments do not qualify for the homestead exemption. However, you may be able to protect real estate investments from liquidation in a number of different ways:

  • Use the wild card exemption
  • Consider a Chapter 13 bankruptcy instead of a Chapter 7 bankruptcy, which will allow you to keep property you could not have kept in Chapter 7, such as investment real estate
  • Assign your real estate investments to a cram-down category, so that you pay the value of the property itself rather than what is owed on the property
  • Consider using Chapter 7 bankruptcy to walk away from bad real estate investments

Bankruptcy Exemptions And Real Estate

Some of the questions that arise relating to real estate, especially the primary homestead and bankruptcy, include:

  • Can a homeowner still negotiate a home loan modification while in Chapter 13 bankruptcy? Our law firm has been successful in this area.
  • If a homeowner is in foreclosure proceedings, is it possible to use Chapter 13 bankruptcy to stop the foreclosure and still negotiate a mortgage modification? Yes, our office has helped clients accomplish both these goals.
  • If a homeowner is severely underwater with his or her mortgage, can Chapter 7 bankruptcy help the homeowner walk away from the house and the debt with no repercussions? Yes, this is possible if the bankruptcy filings are done correctly.
  • Can a homeowner file Chapter 7 bankruptcy and still keep the house? Through reaffirmation of the debt, this may be possible.

Contact The Livonia, Michigan, Law Firm Of Charles J. Schneider, P.C.

The preceding list of questions and answers are intended only to demonstrate the complexity of the relationship between assets, property exemptions and bankruptcy.

If you have any type of complex property concerns, it is advisable to consult an experienced bankruptcy attorney before making any final decisions about how to proceed.

We are pleased to offer private and complimentary consultations to prospective new clients at our Livonia office. Contact us online or call 734-237-1523 to make an appointment.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.