Asset protection in Chapter 7 Bankruptcy

[Happybluesky]

Here is the conundrum. If an asset is sold prior to filing for Chapter 7 Bankruptcy, part of the proceeds can be used to settle a student loan debt not discharable in bankruptcy - but then income level exceeds that allowed by the means test, and there is no Chapter 7 Bankruptcy. On the other hand, if the asset is not sold prior to filing, it will be lost in a Chapter 7 Bankruptcy.

Suppose, however, that the asset is used to secure a loan prior to filing -sufficient to settle the student loan debt, and calibrated to require 2 years - a time long compared to the Chapter 7 process - for repayment. My understanding is that the creditor of the proposed secured loan would essentially have a senior lien over the asset, thus protecting it from other creditors. Would the asset then survive a Chapter 7 Bankruptcy? I assume it would have to be reported in a debtor's hearing.

The other timing issue is that passing the Chapter 7 Bankruptcy Means Test is possible now, but, hopefully, income will be much better in the coming year, making a Chapter 7 situation impossible.

[Javier]

When you make use of the help of a bankruptcy lawyer you will be able to get the best results when you file for bankruptcy. There are many lawyers out there who deal with chapter 7 and chapter 13 bankruptcies. You will have to choose the best lawyer if you want the best results.