What happens to my assets during a Chapter 11 bankruptcy?

In California, during a Chapter 11 bankruptcy, your assets are divided into two separate categories: assets that you will keep throughout the bankruptcy process, and assets that may be sold to repay creditors. The assets you will keep are known as “exempt assets” and are usually few in number. These may include, but are not limited to, a car worth up to a certain amount based on age, equity in your home, furniture, jewelry, wedding rings, and retirement accounts and pensions protected under California law. Additional types of exempt assets may be available depending on your circumstances. In addition, certain funds may be protected in “bankruptcy estates” created during the bankruptcy process. This includes any funds received from a settlement, tax refunds, or other windfalls. The rest of your assets are called “non-exempt assets” and may be used to repay creditors during the bankruptcy process. These may include other cars, boats, recreational vehicles, investment accounts, and even your home if it is worth more than the state’s exemption limit. In a Chapter 11 bankruptcy, creditors will often be paid back a percentage of the debt owed to them, which is determined by the court. Because of this, you may not lose all of your non-exempt assets during the bankruptcy process. Overall, the assets you have in California during a Chapter 11 bankruptcy will be divided into exempt and non-exempt assets. The exempt assets will be kept by you throughout the bankruptcy process, while the non-exempt assets may be used to repay creditors. The court will determine how much of the non-exempt assets will be used to repay creditors.

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