Perhaps you are filing a petition for Chapter 7 bankruptcy. Of primary concern is whether the courts will take everything or allow you to keep some possessions like your cars or home. Fortunately, Chapter 7 bankruptcy includes laws that allow petitioners to keep some of their assets up to a certain amount by claiming them as exemptions. This protection also extends to married bankruptcy filers who have separate personal property that they want to keep in bankruptcy.
Before you start the bankruptcy process, make sure you understand what exemptions you may qualify for to make your financial restart easier to transition through.
What is a bankruptcy exemption?
After you apply for bankruptcy, the court assigns a trustee to your case to sell off all nonexempt assets to settle your debts. Depending on your circumstances, you may exempt some of your property and retain ownership of it. Bankruptcy law does not allow the value of exempt assets to exceed a certain amount. However, creditors can file a proof of claim with the courts to challenge your exemption request within 30 days of the last meeting of creditors.
Claiming exemptions
Exemptions are not automatic, nor do all types of property qualify as homestead, motor vehicle or household property. Some assets may qualify as a wild card exemption. Items you may file an exemption for include:
- Vehicle
- Home
- Medical equipment
- Certain life insurance and retirement accounts
- Alimony
To exempt your property, you must include it in your bankruptcy petition. You should designate the name and value of each item you wish to keep.
