If you have considered filing for Chapter 7 bankruptcy, you may have heard about bankruptcy exemptions and wondered what they refer to. Bankruptcy exemptions are a way of protecting property during the Chapter 7 bankruptcy process and allowing the filing party to keep some of their property following the bankruptcy process.
There are certain specific categories of exempt property that are subject to limits filing parties should be aware of. Other property that falls outside of those categories and limits is not considered exempt. Additionally, a wild card exemption can be something to be familiar with which can protect property that does not fit into one of the exemption categories or has reached the limit for the category. Chapter 7 bankruptcy allows the filing party to liquidate their non-exempt assets to repay creditors.
Types of property that are not exempt from the Chapter 7 bankruptcy process include costly musical instruments unless the filing party is a musician; collections; family heirlooms; cash and investments; a second car or truck; and a second vacation home. Property that may be exempt from the process includes up to a certain value in a vehicle; up to a certain value in jewelry; reasonably necessary clothing; reasonably necessary household goods and furnishings; household appliances; a portion of equity in a family home; pensions; tools up to a certain value if they relate to the filing party's profession; personal injury awards; and some other categories of property.
Chapter 7 bankruptcy exemptions are an important aspect of the personal bankruptcy process to be familiar with. They can help the filing party protect some of their property from the process while enjoying the fresh financial start provided by the bankruptcy process.