If you are considering Chapter 7 bankruptcy, you may be concerned about what the liquidation process entails. In general, Chapter 7 bankruptcy is considered a liquidation bankruptcy for those who qualify to liquidate non-exempt assets to repay debts and enjoy a fresh financial start. Because of the importance of bankruptcy exemption protections, you may wonder what they are, what they mean and how they may impact your bankruptcy process.
The idea of bankruptcy can create some uneasiness and concerns related to a home, car or other assets. It is important to understand that, although the bankruptcy process provides a fresh financial start, it does not necessarily mean starting from scratch following it. Bankruptcy exemption protections are an important part of the bankruptcy process designed to protect the filing party and some categories or property they may own. For instance, homes and cars enjoy bankruptcy exemption protections but are subject to certain value limits or caps. Personal property, including clothing, jewelry, home furnishings and other items, may also be exempted but sometimes value limits may also apply.
An important bankruptcy exemption to be familiar with is the wildcard exemption which protects property that does not fall into a designated category or may exceed a value limit for a particular category. Because some categories of property are completely exempted, while others have value limits, it is important to be familiar with the details of the different exemptions and how they may apply to your particular situation depending on the circumstances. In addition, both state and federal laws can impact bankruptcy exemption protections and not all exemptions may be available in every state.
Bankruptcy exemption protections are important to filing parties and can provide much-needed peace of mind during a difficult and stressful period of time. Because bankruptcy exemption protections, and the bankruptcy process, can be complex, it is important to be thoroughly knowledgeable concerning the process to be as protected as possible.
Source: Bankruptcy.findlaw.com, “Bankruptcy Exemptions: Chapter 7,” Accessed Aug. 2, 2016