“If worries were dollar bills, I’d have money to spare.”
One of the main worries people have when considering filing for bankruptcy protection in Chapter 7 or Chapter 13 is whether they will get to keep their property and belongings.
- What are bankruptcy exemptions?
In filing for bankruptcy, the idea is to wipe out debt and get a fresh start. The Bankruptcy Code understands that, to start over and build your finances, you need to keep some basic necessities (stuff we all need!). Examples include: a place to stay, clothes to wear, some money, furniture and appliances, and a vehicle. How much of each you get to keep is determined by your exemptions, which vary from state to state. When you exempt something, you are claiming that it should be protected and not taken away or counted against you. When filing for bankruptcy, work with a bankruptcy attorney to exempt as much as possible. Most of my clients who file bankruptcy do not have many assets and so they get to keep them all.
- Why are exemptions important?
In Chapter 7, the Court appoints a Trustee to your case who has the power to take your property/assets and sell them to raise money to pay your creditors. The Chapter 7 Trustee gets part of the money, so they want to find assets to sell. In Chapter 7, you want to claim all your assets as exempt to stop the Trustee from taking your things. This is why you need a qualified bankruptcy attorney to help you. After all, the goal is to get you back on your feet, not to put you out into the street.
In Chapter 13, the Court appoints a Trustee to your case to make sure the plan of repayment you propose is fair to you and your creditors. Typically, a Chapter 13 Trustee doesn’t want to take your assets, but they do have to count your assets in figuring out what is fair to everyone. Claiming your assets as exempt is important in Chapter 13 because it can help to lower your monthly payment. A lower payment often means a better chance of success for you in your bankruptcy!
Fueled by Starbucks Black Coffee Latin American Blend.