Test yourself, is Bankruptcy right for you?
Assets are basically what you own. Before thinking about bankruptcy, let’s look at your assets. Assets can include your home, your car, and even your savings account. Regardless of whether or not you owe any money on the item, it will still be considered an asset.
Adding up all of your assets can truly be an eye opening experience for many people. The good news is that in some cases, you may actually have more than you think. Assets can come in many forms, including:
• Property. Property assets include a personal residence, vacation home, and / or rental property. It may also encompass any commercial property such as a business or rental office that is owned.
• Savings. If you have a personal savings account, or even a checking account that holds a large balance, this can be considered a form of savings.
• Investments. Many people have some type of personal investments, such as stocks or mutual funds. In addition, you could also have investments in tax advantaged investments such as an Individual Retirement Account (IRA) as well as an employer sponsored retirement account such as a 401(k).
• Personal Assets. Personal assets can encompass many items such as cars, boats, motorcycles, RVs, or other similar vehicles, as well as furniture, appliances, and jewelry.
• Collectibles. If you collect coins, stamps, art, or other items of value, then these could also be considered assets.
• Insurance. For those who have a permanent type of life insurance, you may have built up some amount of cash value in the policy. This amount will likely continue to build – often on a guaranteed basis – for as long as you own the policy. Therefore, this too can be considered an asset.
The following checklist may help you in determining what assets you currently own, as well as how much each asset is estimated to be worth at the present time:
• Value of Real Estate Owned _____
• Personal Savings Account(s) _____
• Personal Checking Account(s) _____
• Individual Investment Account(s) _____
• IRA Account _____
• Roth IRA Account _____
• 401(k) or Employer Retirement _____
• Life Insurance Cash Value _____
• Value of Auto(s) _____
• Collectibles _____
• Other Assets _____
What About What You Owe?
When you owe money on an asset that you own, a lien is normally placed against that asset. For example, if you own a home, then your mortgage is considered to be a lien. The lien holder is the entity that holds the lien against the item that you own. Thus, with regard to a mortgage, typically a bank or other lender is considered to be the lien holder.
When considering bankruptcy, you are essentially letting the lien holders know that you are unable to pay what is due to them on your loan. Therefore, there is the possibility that the underlying asset could be taken from you and given back to the lien holder, as the item is typically considered as collateral for the loan.