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Debt Counseling Assistance :: Bankruptcy Chapter 7 Exemptions
Bankruptcy Chapter 7 Exemptions:
Understanding Chapter 7 and Bankruptcy Exemptions
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When an individual files for bankruptcy, they are often allowed to keep what are referred to as bankruptcy Chapter 7 exemptions – that is, exempt property up to a certain value. The value or type of that property that is exempt will often vary from state to state.
Any other assets that are not exempt are then sold or liquidated. The proceeds from that sale goes to a interim trustee and is used to repay creditors.
To find out what types of property fall under the Bankruptcy Chapter 7 exemptions rules, keep reading.
Primary Motor Vehicles
If fully paid for, most motor vehicles up to a certain value (depending on the state) will be exempt. Secondary vehicles are not exempt.
Reasonable Clothing and Jewelry
In some states and some cases, a vintage Luis Vuitton bag may not be exempt. But, for the most part, all clothing is exempt. Also, most jewelry is exempt, but often only up to a certain value.
Household Goods and Furnishings
Again, a marble statue or expensive family heirloom may not be exempt, but typically all household goods and furniture are.
Pensions
Any and all pension payments are typically exempt from bankruptcy proceedings.
Tools of the Trade
If you're a plumber, your trade tools will be exempt. If you're a farmer, your massive farm machinery would also be exempt.
Public Benefits
Any public benefits like welfare, child benefits, social security, or unemployment payments that have been saved in a bank account will be exempt. Any earned, but as of yet unpaid wages are also protected.
Portion of Equity in Home
Different states have different rules about whether you can keep all the equity in your home or what percentage or portion is exempt. If you're a homeowner, be sure you understand these rules carefully before you file.
Damages Awarded from Personal Injury Cases
Typically, any damages awarded to you in a personal injury case will be classified as Bankruptcy Chapter 7 exemptions.
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