The decision to file for personal bankruptcy is likely not one that is taken lightly and can include some understandable anxieties and apprehensions. It is helpful for individuals considering filing for Chapter 7 liquidation bankruptcy to be familiar with the process and understand how Chapter 7 bankruptcy exemptions work because this may help ease some of their concerns.
When an individual is considering filing for Chapter 7 bankruptcy protection, they may be concerned about protections for their home, cars and other property. There is a difference between a fresh financial start and starting from scratch, and the Chapter 7 bankruptcy process takes that into account. Certain categories of exemption are taken into account. In general, the Chapter 7 bankruptcy process is a liquidation bankruptcy process for filers who qualify to liquidate non-exempt assets to repay creditors followed by a debt discharge so they can enjoy a financial fresh start.
Bankruptcy exemptions protect certain categories of property and may protect certain types of property or a certain amount of value in property such as a home. Property that may be protected can include cars, jewelry and other types of personal property, according to both state and federal exemptions. Additionally, a homestead exemption may protect a certain amount of value in a family home. Lastly, wild card exemptions may be available for property that does not fit into a specific exemption category or exceeds the limit allowed for the exempted property category.
Because exemption protections can be both state and federal, it is important to be familiar with which exemptions may apply in a certain case. It is helpful overall for parties considering filing for bankruptcy to be familiar with the Chapter 7 bankruptcy process, its protections and the options available to them.
Source: Bankruptcy.findlaw.com, “Bankruptcy Exemptions: Chapter 7,” Accessed May 23, 2017