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Why You Should Reconsider Selling Off Your Possessions

Rapa Law Office, P.C. Feb. 12, 2021

Piling up debt can emotionally tax you. The pressure from creditors may cause you to look at ways to raise cash quickly to pay off some of your debt. You may think selling some of your possessions is the best way to go. However, you should consider holding on to your belongings in case you decide to file for bankruptcy.

Sometimes bankruptcy is the only way to get out from under a large burden of debt. Nerdwallet explains why you should hold off selling your possessions if bankruptcy starts looking like a realistic option for you.

You Might Not Need to Sell Anything

Filing for bankruptcy may allow you to keep most if perhaps not all of your possessions. Chapter 13 bankruptcy permits you to pay off many of your debts through a repayment plan. And while Chapter 7 involves liquidation, you may still hold on to important possessions like a vehicle because they are exempt from liquidation. So selling off plates or a television to pay a debt may be premature until you know how much in debt you must pay and which of your debts a court will discharge.

You May Need to Sell Something Later

It is also possible you will need quick cash at a future date. After you go through bankruptcy, you may need money for a vehicle payment or to rent a house or an apartment. Selling off a few possessions may be of greater help to you in these circumstances than if you used money to pay off debts that a bankruptcy court might discharge anyway.

You Might Lose Money in A Bank Account

You may decide to sell something now to build up cash for emergencies. However, if you should file bankruptcy, creditors may go after the money in your accounts. If you wish to keep money safe for future expenses, you could put some cash away in places where your creditors cannot access them, like a Roth IRA.

Keeping a cool head when you are dealing with debt may keep you from unintentionally harming yourself financially. If you do decide bankruptcy is right for you, you may take advantage of the process while keeping yourself from losing possessions when there is no need to give them up.