The stock market is down, money and credit are tight, bills aren’t getting paid, and creditors are calling–what’s a person to do? Horse owners are not immune from the current economic crisis, and for some people bankruptcy might be the best, or only, option. But what happens to the horses if their owner declares bankruptcy?

Bankruptcy serves two purposes, giving creditors at least a portion of the amount they are owed and providing a fresh start for the debtor. Bankruptcy is not a free pass, however, because a bankruptcy can remain on a credit report for at least seven years, making new credit difficult to obtain. There are serious repercussions from a bankruptcy, and a knowledgeable attorney should be consulted for advice and assistance.

Bankruptcy proceedings come in several varieties:

A Chapter 7 bankruptcy amounts to a liquidation of the debtor’s assets. There are some exemptions, established by state law in most jurisdictions, that allow the debtor to keep some, but not all, property. The non-exempt property is surrendered to a court-appointed trustee, who sells the assets and distributes the proceeds to creditors. Horses, which are considered the personal property of their owners in all states, generally will not have a special exemption