Section 522 of the bankruptcy code allows for the exemption (or protection) of certain classes of assets in a bankruptcy case. Individuals can claim these exemptions to protect some of their assets from the Chapter 7 liquidation process. Hawaii permits debtors to invoke a state exemption scheme and a federal exemption scheme. When a debtor elects to file bankruptcy only one exemption scheme can be invoked. In many cases, debtors are able to keep most if not all of their assets in bankruptcy, however there are limitations. It is extremely important that you disclose all of your assets to your attorney when filing bankruptcy. Assets include any personal or real property of whatever kind that a debtor has an ownership interest in. In many cases anticipated interests are also a matter of liquidation (i.e., anticipated receivables like tax refunds). If you are concerned about losing a particular asset, discuss the matter with your attorney. Do not hide the asset. In many cases there are options for exemption planning. But simple cases become unnecessarily complex when debtors transfer assets without seeking advice from counsel.
Think of a bankruptcy as a financial audit. If you own an asset that is important for you to keep (like a house), do some research into the value of the asset. In many cases it is not necessary to do an appraisal, but the more investigation and research you do into your own financial affairs the more control you will have over the process.
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