Struggling with financial instability can cause a great deal of anxiety about losing all of the things you own to pay off your debts. Will the bank leave you homeless? What happens to your refrigerator if you file for bankruptcy? Will you ever see your grandmother’s wedding dress again if you allow the courts to come to your aid? The good news is that filing for bankruptcy rarely places your hard-earned property at risk and may even help you save it.
Chapter 7 or Chapter 13?
A bankruptcy lawyer can help you navigate the two primary types of bankruptcy that individuals can file: Chapter 7 and Chapter 13. Both require you to categorize your property and its value – from cars and boats to clothing and dishware – into exempt and non-exempt assets. Chapter 13 allows you to keep all of your property, but you will be required to pay your creditors the total amount of your non-exempt property. If you file for Chapter 7 – which offers particularly significant debt relief with no expectation that you’ll pay for any of your eligible debts – expect to lose certain luxury items, if you own any. The bankruptcy trustee assigned to your case is empowered to sell your non-exempt property, if they choose to. People who qualify for Chapter 7 bankruptcy rarely own much exempt property, but it is a risk that exists for those who own valuable items other than their home, primary vehicle, wedding rings, furniture, and other necessities.
What Is Exempt Property?
The good news is that exempt property is classified as anything that the court considers a requirement for starting fresh. As a foreclosure lawyer – including those that practice at The Law Offices of Ronald I. Chorches – can confirm, you can expect to keep your home (minus a certain amount of equity, depending on what state you’re filing for bankruptcy in), car, clothes, household necessities, some tools, and some retirement accounts, among other property and assets. Exempt property and assets are safe from seizure. Be warned that despite their exemption status, you may find your house foreclosed upon or car repossessed if you’re delinquent on payments, but an attorney can usually figure out how to help you avoid these extreme outcomes.
What Are Wildcard Exemptions?
Many states have what is called wildcard exemptions. This is a classification for any personal property you wish to exempt that isn’t on the general exemption list up to a certain dollar amount. The amount you can claim in your wildcard exemption is dependent on how much is left over after applying the Homestead Exemption to your home. This exemption can be used for any kind of property.
With your personal property on the line, it’s important to understand your options when filing for bankruptcy. Contact a bankruptcy lawyer today to find out which type of bankruptcy is best for you and your family.