One of the most common concerns people have with bankruptcy is the fear that this process will cause them to lose their personal property. In reality, it is possible to benefit from the protections provided by Chapter 7 bankruptcy without losing many types of important things. Fears over losing stuff should not be what keeps from taking a step that could be important for your financial future.
Chapter 7 bankruptcy is liquidation bankruptcy. This means there will be the compulsory liquidation of some types of property to go toward repayment of your debt. The intent of bankruptcy is not to leave an applicant destitute, which is why bankruptcy law provides some exemptions. This means certain types of property will be exempt from liquidation.
What will you have to give up?
There are certain types of property that are not exempt from liquidation. Some examples of non-exempt assets include the following:
- Second cars or personal vehicles
- Second homes or vacation homes
- Expensive musical instruments, unless you are a professional musician
- Family heirlooms
- Valuable collections
If an asset is non-exempt, you will relinquish it to the trustee, who will then sell it and use the profits to pay some of your creditors. This is a necessary step before the discharge can take place.
What will you be able to keep?
It may be a relief to know that you will be able to retain many of the things that are most important to you and necessary for your daily needs and comfort. Examples of exempt property include:
- Reasonably necessary furnishing and appliances
- Your personal vehicle worth up to a certain amount
- Necessary clothing and things you need to do your job
- A portion of the equity you have in your home
- Your pension
- Proceeds from a personal injury claim
- Public benefits you currently receive
- Wages you’ve earned but not yet received
These exemptions allow you to move forward with the bankruptcy process without lacking the things you need for everyday life.
Learn more about bankruptcy
Exempt versus non-exempt property is only one thing you should consider when seeking a better financial future through the bankruptcy process. If you feel overwhelmed by your debt and are unsure if there is a way out for you, it may be beneficial to speak with a Georgia bankruptcy attorney about the options available to you.