Investing is a great way to earn passive income, but can you still invest if you're already in bankruptcy? Keep reading to find out.
What Happens During Bankruptcy
If you need to file for bankruptcy, it's important to remember that there will be restrictions regarding your spending. Depending on the type of bankruptcy you file, your finances may be under a different level of restriction.
In Chapter 7, debtors must put their property under the control of the bankruptcy court. The court will evaluate your property and assets to determine what will be exempt from liquidation and what will not. Any property deemed exempt is yours for the keeping.
Bankruptcy trustees are the eyes and ears of the court, and it's their job to manage your remaining assets. They will go through your disposable income and assets and manage property sales of your nonexempt assets to pay off creditors.
On the other hand, under Chapter 13, you are still in charge of your assets, but you must provide a payment plan that will result in debt repayment within three or five years. You still have a responsibility to be accountable for presenting a report of your wages, disposable income, and holdings to the court.
Investing During Bankruptcy: Can I Buy Stock In Chapter 7?
Ultimately, whether you can invest while in bankruptcy depends on your unique case. The point of a trustee or a payment plan is to provide a realistic path to debt relief. That said, in both Chapters 7 and 13, you must be accountable to the court and provide evidence of all disposable income.
To the court and your creditors, if you have savings, non-retirement investments, or other nonexempt monetary resources, they should be used to pay off what you owe.
If you want to invest while in bankruptcy, you'll need the court's permission to do so. Investing means you have money to invest, which in many cases could mean the court will not be inclined to allow you the chance to invest in stocks, property, or other ventures.
What About Investments I've Already Made?
If you invested before filing for bankruptcy, you may want to consider the fact that your holdings could be subject to liquidation under Chapter 7 or funneled into paying off your debts through Chapter 13. The court can levy for future dispersals and payouts depending on your circumstances, so it's essential to understand the risk when filing for bankruptcy or to invest during your case.
How to Invest During Chapter 7 or Chapter 13
Always speak to an attorney at Buchalter & Pelphrey before investing during bankruptcy. Attorneys have a deeper understanding of the law as it applies to your case, and they can advise you regarding investments and assets while your case is in progress.
Contact Buchalter & Pelphrey Attorneys At Law onlineor call (321) 320-6088 for more information.