Venice, a beachfront neighborhood in Los Angeles, was once known for its low-income community of artists, poets, and immigrants. A trace of Venice’s eccentric past remains with Ocean Front Walk, a promenade with performers, fortune-tellers, and offbeat characters. However, the residents of today’s Venice are much more affluent on average than they once were.
A common social misconception is that the affluent do not have debt. If you feel overwhelmed by debt even though you earn a high wage or salary, filing for bankruptcy may help. A chief consideration, particularly for people who are generally well off, is whether bankruptcy allows you to keep your possessions and assets. The answer to this question depends on a variety of factors, which an experienced Venice bankruptcy attorney can help you evaluate.
Protecting Your Assets in a Bankruptcy
When you file for Chapter 7 bankruptcy, for example, you can “exempt” or protect certain assets. Which ones you are able to protect depends upon whether you elect to take System 1 or System 2 exemptions. The same exemptions are applied in Chapter 13 bankruptcy, but they help sort out how much you have to pay unsecured creditors.
Which system to elect depends on what kinds of assets you hope to protect. Usually homeowners prefer System 1, which has a generous homestead exemption that may be applied to your principal residence.
In addition to protecting his or her home, a Venice resident may be concerned about protecting a car, truck, motorcycle or other mode of transportation. Living in the Los Angeles area without a vehicle can make it difficult to get around. System 1’s motor vehicle exemption allows you to protect $2,725 worth of equity in your car. This may seem limited, particularly if you live in an affluent area like Venice. However, both Chapter 7 and Chapter 13 were designed not only to help debtors get out of debt, but also to make sure creditors get paid back to the extent possible. Those items that you cannot protect under System 1 exemptions may be sold to help fulfill the second goal of bankruptcy, which is ensuring that those creditors with priority are paid back.
If you are a renter in Venice with significant personal property that you hope to keep, you may be better off under System 2. You can exempt up to $4,800 in the equity in your car and depending on its value, sometimes an additional vehicle. This ensures that you are able to continue to drive to work. System 2 has a wildcard exemption not available under System 1, which allows you to exempt $1,175 of any piece of property and the unused portion of the homestead exemption. This means that if you have valuable personal effects like clothing, jewelry, a custom surfboard, fancy kitchen equipment, a scooter or sports gear, you may be able to keep them.
Figuring out which system to elect and making sure you protect all the assets you hope to keep can be much easier with the help of an attorney. Contact the careful, trustworthy Venice bankruptcy lawyer Devin Sawdayi at 310-475-9399 or via our online form for confidential help in considering or filing for bankruptcy.
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