What Types of Assets Can You Keep After Filing For Bankruptcy?

Filing for bankruptcy can be a daunting decision, but it also offers a pathway to financial stability and relief from overwhelming debt. One of the most common concerns for individuals considering bankruptcy is the fate of their assets. Understanding what types of assets you can keep after filing for bankruptcy is crucial for making informed decisions. This blog will delve into the concepts of exempt and non-exempt property and clarify which assets are protected under Chapter 7 bankruptcy.

Understanding Exempt and Non-Exempt Property

When you file for bankruptcy, your assets are categorized into two main types: exempt property and non-exempt property. This classification determines what you can retain and what may be sold to pay off your creditors.

Exempt Property

Exempt property refers to assets that the bankruptcy code allows you to keep. These assets are protected because they are deemed necessary for your day-to-day living and maintaining a basic standard of living. The specific exemptions can vary depending on federal and state laws, but common types of exempt property include:

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• Homestead: Equity in your primary residence up to a certain limit.
• A Motor Vehicle: Equity in one car up to a certain value.
• Personal Items: Necessary clothing, household goods, and furnishings.
• Tools of Trade: Tools or equipment essential for your profession.
• Wages: A portion of unpaid but earned wages.
• Public Benefits: Social Security, disability, and unemployment benefits.
• Retirement Accounts: Most retirement accounts, such as 401(k)s and IRAs, are generally protected.

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These exemptions ensure that you can maintain a basic standard of living while working through your financial difficulties.

What Are Non-Exempt Assets?

In the context of Chapter 7 bankruptcy, which is often referred to as "liquidation bankruptcy," understanding what assets are exempt from bankruptcy is particularly important. Chapter 7 bankruptcy exempt assets are those you can keep while the non-exempt assets are sold off to satisfy your debts.

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Federal law provides a list of bankruptcy exempt assets, but many states have their own exemption laws that may be more favorable. Some states allow you to choose between the federal and state exemptions. It's essential to review the specific exemptions available in your state to maximize the protection of your assets.

Non-Exempt Property

Non-exempt property consists of assets that do not fall under the exemption categories. These assets can be sold by the bankruptcy trustee to pay off your creditors. Examples of non-exempt assets include:

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• Vacation Homes: Equity in secondary residences.
• Luxury Items: Valuable collections, such as art, jewelry, and antiques.
• High-Value Vehicles: Cars with equity exceeding the exemption limit.
• Investments: Stocks, bonds, and other investment properties.
• Cash: Savings accounts and cash exceeding the exemption limits.

Understanding what non-exempt assets are is crucial because these are the items at risk of being liquidated in a Chapter 7 bankruptcy. Proper planning and consulting with a bankruptcy attorney can help you navigate the complexities and protect as much of your property as possible. The legal office of Corey Beck is here to help you with filing for bankruptcy and understanding how to protect your assets. Contact us today for a free consultation and let us help you protect your financial future.

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