Bankruptcy exemptions can help you keep assets, so when you are deep in debt, you might consider filing a Chapter 7 or Chapter 13 case.
If you can afford to repay your debts through a payment plan, Chapter 13 can be an option. However, if you cannot afford to make the payments, then filing for Chapter 7 bankruptcy can be a solution. While this will discharge most of your debts, you might be hesitant to seek this type of bankruptcy because you may need to liquidate your assets to pay off your creditors.
However, there are ways to protect your assets. You can work with your bankruptcy attorney to determine how to protect some of your belongings and assets through exemptions.
What Are Bankruptcy Exemptions?
When you file for bankruptcy, you are allowed to keep a certain amount of property after your bankruptcy proceedings. This exempt property exists to help you have something to restart your life with after your bankruptcy. Assets that cannot be protected, called non-exempt property, will be sold off to repay some of your debts or you may have an opportunity to ‘but back the equity from the bankruptcy court’s trustee for the value of this property.
Under the guidance of your bankruptcy attorney, you can determine which assets you are allowed to label as exempt, and which will need to be classified as non-exempt. Your attorney will have the experience to help you keep as many assets as possible.
Typically, the property you can claim exemptions to protect are items that you need to live your daily life or that you require for work. For instance, no one is interested in taking your dishes, clothes, or furniture a significant amount for your other property. The goal of bankruptcy is to help you get out of debt and restart your life without the burdens of your bills. If you lose everything in your bankruptcy, you will not be able to productively restart your life. You need essential items to perform your job, and do not need the burden of needing to find a new house, buy a car, or other large expenses immediately following your bankruptcy proceedings.
The court typically decides what can be considered exempt. An experienced attorney knows what you can list and what will need to be classified as non-exempt, so it’s important to listen to your lawyer.
Some examples of property protected by exemptions include:
- Your vehicles, up to a certain value
- Clothing, up to a reasonable amount and value
- Household goods and furniture
- Household appliances
- Jewelry, up to a certain value
- Your pension or retirement plan, if you have one
- A portion of the equity in your home called your homestead
- Items you need for your occupation, up to a certain value
- A portion of your earned but not-yet-paid wages
- Welfare, social security, unemployment, and other government benefits
While these are common items, this is not a complete list. It’s important to work with your bankruptcy attorney to identify assets that are specific to you that you need to work or live, and are not listed above.
Items that are not essential to your life or your job may be considered non-exempt. Some common items you may need to turn over to the court to be liquidated include:
- Valuable musical instruments
- Collections of valuable items like stamps, coins, jewelry, antiques, and other items
- Family heirlooms
- Some money in your checking accounts
- Stocks, bonds, and other investments not in retirement accounts
- Extra vehicles
- A second home or vacation property
Let Us Help You
When you are considering filing for Chapter 7 bankruptcy, let our lawyers at The Law Offices of Alexzander C.J. Adams, P.C. help you sort through your options. We work for you, the people, and not institutions. Contact us for a free case evaluation, or no-obligation consultation. We are dedicated to helping you overcome this small bump in the road and assisting you to get on with your life.