Cryptocurrency is becoming a popular form of investment, allowing individuals to purchase various types and build their portfolio. As the amounts increase, they can continue to either withdrawal or purchase additional amounts in order to increase their earnings. However, when it comes to bankruptcy law, knowing how to handle these accounts may prove difficult. Here’s a closer look to help you better prepare. 

What Happens During a Chapter 7 Claim? 

Chapter 7 bankruptcy is when the court eliminates any unsecured debts, including credit cards, medical bills and utility costs. Your attorney will then figure out how to use personal assets to cover the remaining debts. This is done by meeting with the creditors and creating a proposal until they're satisfied with the results. 

Since the value of cryptocurrency is known to fluctuate, there’s a chance that it won’t become eligible for an exemption. This is when the courts allow claimants to protect assets that are equal to a certain amount. If the account is low at the time of filing, then it might not qualify and be left available for future use. 

Keep in mind that you have to pass the means test in order to pursue Chapter 7 bankruptcy. This means estimating the total income over the last six months and comparing it with the similar household in your state. If it’s found to be enough to cover a portion of the costs, then you’ll have to consider an alternate solution. 

What About Chapter 13? 

Chapter 13 bankruptcy is when the attorney goes through the current debts and assets in order to figure out an affordable payback plan. This usually includes a slight redistribution of the amounts that are due and extends the timeframe to approximately three years.

The process requires going through each of the available assets and determining what you’re able to contribute on a monthly basis. If there’s cryptocurrency available, then the court may require you to liquidate the accounts to cover any expenses.

For more than 20 years, William A McWhorter has been providing legal guidance to clients in Pell City, AL, and the surrounding area. He’s well-versed in the intricacies of bankruptcy law and understands that every case is unique. His personal approach will ensure that you have all the required information before making a final decision. Other areas of expertise include property law and wills and estates. Call (205) 338-4411 to set up a consultation or visit his website for a complete list of services.