When you begin to think about Chapter 7 bankruptcy, one of the primary questions you will have is as follows: how much property will I be allowed to keep? In other words, you may be worried about what you can keep and what you will lose if you file.
Unfortunately, there is no simple answer to this question. It depends on many factors, including the type of property you own, how much the property is valued at, and the exemptions you are allowed to use.
Upon filing for Chapter 7 bankruptcy, most of your assets become part of the bankruptcy estate.
A trustee is appointed to oversee your case, and this person is in position to sell your assets as a means of collecting money to repay creditors. That being said, this doesn’t mean you have to give up everything to pay back creditors.
With exemptions, you are able to keep some property. This gives you the opportunity to start fresh once the process comes to an end.
In short, if you exempt an asset, the trustee overseeing your case is not allowed to sell it with hopes of using the money to pay creditors.
How much can I exempt? This is the question that will weigh on your mind from the start. With so many federal and state exemptions in place, this can be a difficult question to answer unless you are familiar with bankruptcy laws.
In some states, you have to use their exemptions. In others, you can use federal exemptions as opposed to those outlined by the state.
When getting started, take the time to make a list of your assets. From there, you can work with an attorney to compare the value against each exemption system. This will allow you to focus on keeping the property you want, while letting other types go.
If this sounds confusing, you are not the only person who feels this way. Many people worry about what will happen if they file for Chapter 7 bankruptcy. Contact us to have all your questions answered in an accurate and timely manner.