Financial planning is complicated, and you may not know where to start. However, it's crucial to have an asset protection strategy in place to protect what's yours. Keep reading to learn more about asset protection.
What Is Asset Protection?
Asset protection includes strategies that protect your financial assets from predatory creditors and probate after death. Businesses and individuals can have asset protection, but anyone looking to secure their finances should consider legal protection.
It's also important to note that asset protection can help you decide whether bankruptcy is right for you. Many individuals find evidence to prove that bankruptcy is the best choice for their financial situation, while others may need to pursue a bankruptcy alternative.
How It Works
Asset protection works by following several necessary steps.
Identify the Debtor
If you owe money, you are the debtor, and it's your job to identify any financial entanglements you may have. If you owe medical bills, student loans, child support, or other obligations, your assets may decrease in value over time.
Identify the Creditor
In order to build a battle strategy, you have to figure out who you're fighting. In this case, it would be the creditor(s). Lenders and creditors come in all shapes and sizes, and they all have different levels of power over asset seizure. For example, if you owe money to the IRS, then the U.S. government is technically your creditor, and it has vast resources and unmatched power to claim your assets.
Investigate the Nature of the Claim
It's just as important to understand the art of war as it is to know you're enemy. Depending on the nature of your claim, you may not be able to apply some asset protection strategies. For example, dischargeable claims can be written off in bankruptcy court, but other claims may be immune to the court. You'll need to know the limitations of your loan before you attempt to protect assets.
Determine the Nature of the Asset
Some assets are exempt from creditor collection, but others could be vulnerable. For example, homestead exemptions protect homeowners from foreclosure, but the creditor may still be able to take your vehicle for collateral.
Creating an Asset Protection Plan
Once you've followed the steps listed above, you can begin to strategize. Always work with an attorney to ensure that your assets are legally protected from seizure. A lawyer can research your financial history and debts and help you understand what options may be best for you.
Not all asset protections are created equal, so it's best to consult an attorney before landing on a solution without careful investigation. Asset protection can save your most precious possessions from collection by creditors, so you should avoid cutting corners.
For more information about asset protection, check out these blogs:
Speak with a lawyer at Buchalter & Pelphrey Attorneys At Law to learn how we can help you build an asset protection plan.