What happens to my property when I file for Chapter 7 Bankruptcy?

In a previous blog post, the automatic stay feature of Chapter 7 bankruptcy is discussed. This provides the Debtor who files the Chapter 7 bankruptcy case to immediately enjoy protection from the bankruptcy court to the extent that creditors are enjoined from taking collection measures against the Debtor on their claims while the bankruptcy case is active or until specific relief from the stay, upon motion of the creditor, is granted. This post addresses a different aspect of the bankruptcy process: what happens to the Debtor’s property upon filing of the case.

Effectively, all of the Debtor’s property is placed into the estate of the bankruptcy. While a Debtor can continue to live in his/her home, drive his/her car and wear his/her own clothes, this and all other property belonging to the Debtor cannot be sold, liquidated, used as collateral or used to pay off debts which may have been due prior to the filing of the bankruptcy. The trustee who is appointed by the bankruptcy court will control the estate of the bankruptcy; hence, this trustee will have control over the property in the estate and will have the power to sell, liquidate or otherwise transfer interests in the property during the course of the bankruptcy case, subject in many instances to court approval.

Some property in the estate will be deemed to have such negligible value to the estate that the trustee may agree to abandon that property. In the context of Chapter 7 bankruptcy, abandonment of property in the estate means that the control and the exclusive right to exercise control over such property is given back to the Debtor after the bankruptcy court grants a motion either by the trustee or the creditor to so “abandon” that property, or let the Debtor re-exercise control over it.

In Albuquerque, Giddens & Gatton Law, P.C. has bankruptcy attorneys who offer expert handling of Chapter 7, Chapter 11, Chapter 12 and Chapter 13 bankruptcy cases in New Mexico. The firm represents many debtors and creditors in Albuquerque, Santa Fe, Taos, Raton, Farmington, Gallup, Grants, Roswell, Los Lunas, Placitas, Belen and the rest of New Mexico. Contact Giddens & Gatton Law, P.C. at (505) 633-6298 to set up an appointment with one of its New Mexico bankruptcy lawyers or visit the firm’s website at giddenslaw.com. Giddens & Gatton Law, P.C. is located at 10400 Academy Road N.E., Suite 350 in Albuquerque, New Mexico.