When filing bankruptcy, you might be hesitant to apply for Chapter 7 because you are afraid to lose your property – like your house. While you do need to turn over some of your assets to the court to liquidate them and pay off your debt, you can keep some items through exemptions. This option should give you some assurances that you will not be left without any essential belongings after your bankruptcy proceedings.
Learn about these exemptions and what property is eligible.
What Are Exemptions?
Exemptions refer to property that is protected during bankruptcy proceedings and does not need to be sold off to repay debts. After filing bankruptcy, the court wants you to be able to rebuild your life and start over successfully. Because of this, the court allows you to keep key assets.
Working with your bankruptcy attorney, you can determine how much property you can claim as exempt, and what types of assets qualify for exemptions. Because your income and assets must fall under a certain amount to qualify for Chapter 7 bankruptcy, you are likely to be successful in claiming exemptions on most of your property. If you’re worried, work with your attorney. A bankruptcy lawyer can help you protect your most important belongings.
Common Exempt Items
When applying for Chapter 7 bankruptcy, there are certain items that courts will typically allow you to claim as exempt. Working with your bankruptcy attorney, you can usually keep the following assets:
- Vehicles (up to a certain value)
- Clothing
- Necessary household items
- Jewelry (up to a certain value)
- Items you need to perform your job or earn an income
- Any pension plans you have
- A portion of the equity in your home
- Some of your unpaid but earned wages
- Any public benefits you are receiving, like welfare, unemployment, and social security.
- Any money or other damages you were awarded in a personal injury case.
These items are considered essential to helping you rebuild your finances after your bankruptcy proceedings. They also impact your ability to live your life and make it through the day-to-day. If you own any of this property and want to protect it during bankruptcy proceedings, you must work with a bankruptcy attorney to determine how to label the items as exempt.
Property That’s Typically Not Exempt in Chapter 7
While it would be ideal if you could keep all of your property through Chapter 7 bankruptcy, not all items can be claimed exempt. You will likely need to sell some property to pay off some debt. Some items the court usually will not let you protect through exemptions are:
- Collections of valuable items. This can include jewelry, baseball cards, coins, and other items that could be sold for a significant amount of money.
- Family heirlooms – if they are of value.
- Musical instruments that are not used to generate income. This can include a piano in your home.
- All cash in your possession and all money in your bank accounts.
- Any stocks and bonds.
- All investments.
- Additional vehicles beyond your main mode of transportation.
- Additional homes beyond your main place of residence.
These items are not deemed essential and are considered to be luxuries that you can sacrifice to pay off some of your debts.
Contact an Attorney
If you are considering filing Chapter 7 bankruptcy to cope with mounting debt, it’s crucial to hire an experienced attorney to help you through the process. Our experts can help you determine how to protect your property and correctly navigate the Chapter 7 bankruptcy proceedings. Don’t let debt ruin your life. Call (405) 529-9377 for a free case review.