If you're like most Chapter 7 bankruptcy filers, you will be concerned about exemptions. What personal assets will you need to liquidate in your bankruptcy process? What personal assets will be exempt from liquidation? Fortunately, with advanced planning and legal analysis, you can make an educated guess about which of your assets you'll be able to keep.
The following assets, for example, often benefit from exemptions:
Your home: Your Chapter 7 bankruptcy is not supposed to leave you penniless, possession-less and homeless. You may be able to qualify for an exemption that applies to your home up to certain limits.
Your automobile: Your vehicle, up to certain value limitations may be exempt from liquidation.
Personal property: The clothes on your back are clearly important, and so are the rest of the clothes in your closet. Unless they are high-dollar luxury items that could be liquidated for a sizable sum of cash, you should be able to keep your clothes. Your jewelry, furniture, appliances and other personal property could also be exempt.
Professional items: The tools of your trade, your delivery truck, your machinery – and other items like this – that you require for your job may be exempt as well.
If you're worried that your bankruptcy is going to leave you poor and penniless, you're mistaken. Chapter 7 bankruptcy is intended to make you leaner financially and leave you in a better financial position than you were in before you started the process. It's not supposed to create more challenges than you had to begin with. This is why, for example, you'll be able to keep your car and your home, so you can continue to be a productive, income-generating member of society.
Source: Findlaw, "Bankruptcy Exemptions: Chapter 7," accessed June 01, 2018