How is property protected in a Chapter 13 bankruptcy process?

On Behalf of | Apr 20, 2017 | Chapter 13 |

Bankruptcy can be a reorganization option for individuals. However, in order to use this bankruptcy type, filers must have a reliable source of income. Those seeking to reorganize their debt and enjoy a fresh financial start at the end of the process should consider filing for Chapter 13 bankruptcy. A manageable repayment plan is developed through the Chapter 13 bankruptcy process that allows the filing party to repay their debts over a 3-5 year period.

It is important to keep in mind that similar to a Chapter 7 liquidation bankruptcy, certain assets are protected because they are exempted from the bankruptcy process during a Chapter 13 bankruptcy. It is also important to be aware of the key differences between the two types of personal bankruptcy options, as a Chapter 13 bankruptcy does not involve the liquidation of non-exempt assets to repay creditors and instead is a reorganization process that results in a repayment plan followed by a debt discharge at the end of the process.

It is useful for filing parties to understand the rules surrounding exemptions in their state. Federal laws also govern exemptions and limits can also be placed on certain categories of exemptions. With a few exceptions, individuals filing for Chapter 13 bankruptcy are generally able to retain possession of their property. The value of the filing party’s non-exempt property, however, is used to establish how much the filing party will have to repay. Exempt categories of property can include cars; a family home, referred to as a homestead exemption, personal items such as clothes, household items and furniture and jewelry.

There are different personal bankruptcy options to help individuals in different situations struggling with the stress and strain of debt. It is important to be familiar with how each option works to be able to understand which might be best for you.

Source:, “Exempt Property in a Chapter 13 Bankruptcy,” Accessed April 17, 2017


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