What Assets Qualify for Property Preservation?

Property preservation is a legal process that protects assets from creditors. When a person or business files for bankruptcy, the court appoints a trustee to oversee the distribution of assets to creditors. However, not all assets are subject to property preservation. Some assets, such as exempt property, are protected from creditors and cannot be used to satisfy debts. Other assets, such as non-exempt property, can be used to satisfy debts, but only after the exempt property has been exhausted.

Exempt Property

Exempt property is property that is protected from creditors by law. This protection is based on the idea that certain assets are necessary for a person to maintain a basic standard of living. Exempt property can include:

The amount of exempt property that a person is entitled to varies from state to state. In some states, the homestead exemption is unlimited, while in other states it is limited to a certain amount. Similarly, the amount of personal belongings that are exempt from creditors varies from state to state.

It is important to note that exempt property is not completely protected from creditors. In some cases, creditors may be able to force the sale of exempt property to satisfy debts. For example, if a person has a large amount of equity in their home, a creditor may be able to force the sale of the home to satisfy a debt.

Non-Exempt Property

Non-exempt property is property that is not protected from creditors by law. This property can be used to satisfy debts if the exempt property has been exhausted. Non-exempt property can include:

Creditors can seize non-exempt property to satisfy debts. However, they must first obtain a judgment from a court. Once a judgment has been obtained, creditors can use a variety of methods to seize non-exempt property, including:

If you are facing a lawsuit, it is important to understand what assets are exempt from creditors and what assets are non-exempt. This knowledge can help you protect your assets and ensure that you have the resources you need to maintain a basic standard of living.

Preserving Assets

There are a number of things you can do to preserve your assets from creditors. Some of these strategies include:

Exempting assets from creditors is the most straightforward way to protect them. However, it is important to understand that not all assets can be exempted. Hiding assets from creditors is also an option, but it is important to be aware of the legal risks involved. Transferring assets to a trust can be an effective way to protect assets from creditors, but it is important to structure the trust properly.

Filing for bankruptcy can also be an effective way to protect assets from creditors. However, it is important to understand the bankruptcy process and the consequences of filing for bankruptcy before making a decision.

What to Do If You Are Sued

If you are sued, it is important to take action to protect your assets. The first step is to contact an attorney. An attorney can help you understand your rights and options and develop a strategy to protect your assets. There are a number of things you can do to protect your assets, including:

The best course of action will depend on your specific circumstances. An attorney can help you determine the best course of action for you.

Protecting your assets from creditors can be a complex and challenging process. However, it is important to understand the options available to you and to take action to protect your assets before it is too late.