Chapter 7 Bankruptcy and the 180-Day Rule

May 6, 2012 by  Filed under: Bankruptcy 

When a debtor files bankruptcy he is required to list all of his property. The term property is sometimes difficult to define. Property includes your house, car, clothing, jewelry, electronics, and other items that you possess. This term also encompasses less tangible things like financial accounts, patents, accounts receivables, and client lists. All property owned by the debtor must be listed in the schedules that are a part of the bankruptcy petition.

On Schedule C the debtor lists the exemptions available to them. Exemptions are laws that allow debtors to protect property from seizure by creditors to satisfy a judgment. Each state has its own set of exemptions. The Bankruptcy Code also provides a set of exemptions which are available to debtors in select states. In bankruptcy all property that is protected by these exemptions remains the debtor’s property after the bankruptcy case is finished. Property that falls outside the amounts or categories protected under the exemptions becomes property of the bankruptcy estate. The trustee can take the unprotected property, liquidate it, and pay the proceeds to the creditors listed in the bankruptcy schedules.

The bankruptcy estate isn’t limited to property owned at the time the case is filed. If a debtor becomes entitled to a financial windfall, such as winning the lottery or an inheritance, within 180 days after filing bankruptcy, this property may become part of the bankruptcy estate as well. It is important to understand that it is the date upon which the debtor becomes entitled to the money or property and not when they actually receive it that matters. If the property happens to be from a source that makes it exempt, then it remains the property of the debtor despite the 180-day rule.

Nathan S. Graham is a bankruptcy attorney representing consumers and small businesses in Chapter 7 and Chapter 13 bankruptcy cases in Dallas and surrounding communities.

For more information about Nathan Graham visit his web site at http://www.bankruptcylawyer-texas.com.

Article Source:
http://EzineArticles.com/?expert=Nathan_S_Graham

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