Exempt vs. Non-exempt Property Under Chapter 7

For most consumers, life before bankruptcy is fraught with financial difficulties. It is important to remember that although bankruptcy is not the first resort, it is best not to wait too long to take action. If you are facing what seems to be insurmountable debt, contact an attorney at once in order the make the best of a bad situation.

Learn More About Chapter 7 Bankruptcy

Want to learn more about the Chapter 7 bankruptcy process? Below you will find a great deal of information to help you decide if filing Chapter 7 is right for you. When you are ready to discuss your case specifically with an experienced attorney, contact us at the Cleveland law firm of Richard Banks & Associates. We serve people throughout Tennessee and North Georgia.

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Free initial consultation: Call us toll free at 866-596-8527, or send us an e-mail to talk to an experienced Cleveland lawyer about filing Chapter 7 bankruptcy.

What type of debt problem are you faced with? Chapter 7 bankruptcy easily eliminates credit card debt, medical debt and more. At the law firm of Richard Banks & Associates, we will analyze your debt load and explain how Chapter 7 can help.

Exempt vs. Non-exempt Property Under Chapter 7

In a Chapter 7 liquidation case, the debtor must relinquish certain property to the bankruptcy trustee so that he or she can sell the property and use the proceeds to pay off debts. Property of the bankruptcy estate is broadly defined in the Bankruptcy Code. 11 U.S.C. § 541. The bankruptcy estate is technically the legal owner of all of the debtor's property and consists of all legal and equitable interests that the debtor has in property at the initiation of the bankruptcy case. Income that the debtor earns after the date of the petition is not included in the bankruptcy estate. Debtors, whether they are businesses or individuals, are often justifiably concerned about what property they will be allowed to keep and what they must give up. A bankruptcy lawyer at Richard Banks & Associates in Cleveland, TN, can answer these and other questions, allay fears and keep the process moving forward as painlessly as possible.

Non-exempt property

Items that the debtor usually must forfeit include:

  • Expensive musical instruments, unless the debtor is a professional musician
  • Collections of stamps, coins and other valuable items
  • Family heirlooms
  • Cash, bank accounts, stocks, bonds and other investments
  • A second car or truck
  • A second home or vacation home

Exempt property

A debtor must file a schedule of exempt property with the court. Exempt property is property that the debtor can protect from liquidation. The Bankruptcy Code allows each state to adopt its own exemption laws, which the debtor can select instead of the federal exemptions. It is important to consult with an attorney who can explain the exemptions available under your state's laws and how they compare to the available federal exemptions.

Exempt property typically includes:

  • Motor vehicles, up to a certain value
  • Reasonably necessary clothing
  • Reasonably necessary household goods and furnishings
  • Household appliances
  • Jewelry, up to a certain value
  • Pensions
  • A portion of the equity in the debtor's home
  • Tools of the debtor's trade or profession, up to a certain value
  • A portion of unpaid but earned wages
  • Public benefits — including public assistance (welfare), social security and unemployment compensation — accumulated in a bank account
  • Damages awarded for personal injury

Speak to a bankruptcy lawyer

If you have questions about what property you will be allowed to retain if you file for bankruptcy under Chapter 7 of the Bankruptcy Code, it is prudent to seek the counsel of an experienced and knowledgeable bankruptcy attorney. Contact Richard Banks & Associates in Cleveland, TN, today to schedule a consultation.

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