Bankruptcy law permits debtors to keep certain property known as exempt property following Chapter 7 bankruptcy proceedings. In general, you are allowed to exempt some of your property and liquidate some of the non-exempt property to pay off your creditors.
With proper planning, you could potentially the same majority of your property even if you are considered bankrupt.
Exempt Property in a Chapter 7 Bankruptcy
Generally speaking, exempt property includes “life’s necessities” or those you would need to continue living and working, explains a top asset protection lawyer at Barski Law Firm PLC in Scottsdale, AZ. The reason for this is that so you would have enough property that you could utilize to “get back on your feet”. These include:
- Some clothing, mostly basics
- Some home furnishings, goods, and appliances
- Motor vehicles – depending on its market value
- Jewelry – depending on the value
- Some of your earned, but unpaid wages
- Some of your home equity
- Tools of your profession or trade
- Personal injury damages
- Public benefits such as Social Security, public assistance, as well as unemployment compensation
Non-Exempt Property in a Chapter 7 Bankruptcy
Non-exempt property, or property that you would need to give up to your bankruptcy trustee for liquidation and repaying your debts, includes property that fall outside the scope of property necessary for you to live modestly and continue working. These include:
- Bank accounts, cash, bonds, stocks, etc.
- Family heirlooms
- Valuable musical instruments, unless you are a professional musician
- Collections of valuable items such as coins, stamps, etc.
- A second motor vehicle
- A second home or vacation home
Bankruptcy is among the most complicated areas of law, and filing for bankruptcy could affect your financial future. And while you’re afforded certain property exemptions under bankruptcy law, you also stand to lose so much more. That being said, if you are planning on filing for chapter 7 bankruptcy or are going through bankruptcy, it would be in your best interested to seek help from an experienced bankruptcy lawyer to help you figure out the most suitable arrangements for you.