Worried About Losing Your Property When Filing Bankruptcy?

The amount of property you can keep while going through the bankruptcy process depends on several factors, including the type of bankruptcy you file (Chapter 7 or Chapter 13), state exemption laws, and the value of your assets. Here’s a general overview of property exemptions in bankruptcy:

1. Chapter 7 Bankruptcy:

• In Chapter 7 bankruptcy, you may be able to keep certain property that is exempt from liquidation by the bankruptcy trustee. Exempt property is protected from being sold to repay creditors. The specific property exemptions available to you depend on the exemption laws of your state or federal bankruptcy law if your state allows you to choose between state and federal exemptions.

2. Chapter 13 Bankruptcy:

• In Chapter 13 bankruptcy, you can keep all of your property, including non-exempt assets, as long as you propose a repayment plan that provides for the repayment of creditors an amount equal to the value of your non-exempt assets over the duration of the plan.

Common Types of Property Exemptions:

1. Homestead Exemption:

• This exemption protects equity in your primary residence up to a certain dollar amount. The homestead exemption varies significantly from state to state.

2. Personal Property Exemptions:

• These exemptions protect certain types of personal property, such as household goods, clothing, furniture, vehicles, and tools of the trade, up to specified dollar amounts.

3. Retirement Account Exemptions:

• Retirement accounts, such as 401(k) plans, IRAs, and pensions, are often protected from creditors in bankruptcy, up to certain limits.

4. Wildcard Exemption:

• Some states offer a wildcard exemption that allows you to exempt a certain amount of any property of your choosing, in addition to other exemptions.

It’s essential to consult with a knowledgeable bankruptcy attorney to understand the specific property exemptions available to you based on your state’s laws and your individual circumstances. An attorney can help you maximize the exemptions available to protect your assets while going through the bankruptcy process.

Additionally, if you have non-exempt assets that you wish to keep in Chapter 7 bankruptcy, you may have the option to “buy back” those assets from the bankruptcy estate by paying the trustee the value of the non-exempt equity in the assets. This allows you to retain ownership of the assets while still receiving a discharge of your debts.

Property In Bankruptcy