Chapter 7 bankruptcies can be great for those who are in debt and who have no disposable income to pay down what they owe. Some people worry about filing for this form of bankruptcy due to the belief that it may leave them with nothing. However, despite the fact that assets may be liquidated during a Chapter 7 bankruptcy, there are actually many exemptions.
With an exemption, you may be able to protect the assets you have in your possession. The result of this is that you may need to liquidate only a small amount of what you own, if anything at all.
How does an exemption work?
When you are in possession of exempt property, the property is protected against liquidation. Some of the kinds of property that may be protected include:
- Motor vehicles, like your car, up to a certain value
- Reasonably necessary household furnishings and goods
- A certain value of jewelry
- Damages that were awarded due to a personal injury
- A portion of the equity in your home
- Public benefits
- A predetermined amount of unpaid and earned wages
- Household appliances
- Necessary clothing
With exemptions, you can protect many of the necessities you need in day-to-day life. On the other hand, there are some items that may not be exempt. Those might include:
- Collections, such as coin or stamp collections
- Second homes
- Family heirlooms
- Expensive musical instruments (with an exception made for those who perform professionally)
As you can see, there are many assets that you can protect during a bankruptcy. Our website has more on what to expect if you decide to file.