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U.S. Supreme Court weighs in on exempt assets in bankruptcy

Financially pressed people in Florida and elsewhere across the country often have misconceptions about the debt relief that can be obtained through filing for bankruptcy.

A foremost concern among many people seeking help but feeling overwhelmed and disconcerted by a perceived lack of options is that they simply will not qualify for bankruptcy.

That often turns out to be far from the truth. Consumers are often quite surprised and relieved to find out that they are in fact eligible to file for bankruptcy. An empathetic and experienced debt relief attorney can work with a client by applying the so-called "means test" set forth under federal bankruptcy law to help determine whether the client qualifies for filing. If so, a further determination can be made as to whether Chapter 7 or Chapter 13 is the better choice for a debtor.

Another commonly held misconception is that all -- or nearly all -- assets will be lost if bankruptcy is pursued.

In fact, many clients are surprised to learn that much of their property is often exempt in a bankruptcy filing, with many filers being able to keep their homes, vehicles and retirement savings.

A recent United States Supreme Court ruling amply illustrates this. The facts of the case reveal that a California man who declared Chapter 7 bankruptcy was entitled to claim a large amount of the value in his home as exempt property immune from the reach of creditors.

Although it was subsequently determined that the man unlawfully shielded some assets from creditors, the nation's highest court reversed a bankruptcy court ruling that the otherwise protected assets could be seized to defray costs associated with the fraud.

Not so, ruled the Supreme Court, holding that property deemed exempt from creditors in a bankruptcy proceeding cannot later be used to punish a debtor for discovered misconduct.

Persons with questions or concerns regarding bankruptcy can receive prompt, confidential and knowledgeable advice from a proven debt relief attorney.

Source: Ct Post, "Court: Exempt funds protected in bankruptcy," author uncited, March 4, 2014

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