Chapter 7 bankruptcy is liquidation bankruptcy, which means you may have to give up some of your property during this process. The property you relinquish will go toward some of your outstanding balances. Giving up things that are important to you may be one of the things holding you back from considering bankruptcy, even if your financial situation is dire and you would benefit from this protection.
It may be helpful to know that bankruptcy law provides a way for you to keep some of your personal property, even during Chapter 7 bankruptcy proceedings. There are exemptions that allow an applicant to retain some of the things he or she needs for daily needs and work. If you are considering liquidation bankruptcy, it is in your interests to understand the difference between exempt and non-exempt property.
Exempt property: what you can keep
If you file for Chapter 7 bankruptcy, it is because you have debt you can no longer manage on your own. The purpose of this process is to protect you from collection efforts and discharge certain balances, not leave you destitute and without the things you need. This is why there are property exemptions. Some of the things you will be able to keep include:
- Specific tools and items you need to do your job
- Things you need for your home, such as reasonably necessary furnishings
- Necessary and important appliances
- Jewelry that is worth less than a certain amount
- A certain amount of equity you have in your home
- Necessary clothing
- Damages you won through a personal injury claim
- Wages you’ve earned but have not received
- Your pension and any public benefits you receive
Non-exempt property: what you must give up
There are certain types of property you will not be able to keep during Chapter 7 bankruptcy. Generally, these are things not necessary for modern work and home life. Examples include:
- Valuable collections
- Expensive musical instruments
- Second homes or vehicles
- Stocks, bonds, investments, cash and savings accounts
Through the Chapter 7 bankruptcy process, you can effectively deal with certain types of balances, ultimately laying the foundation for a better financial future. If you are considering this process, you may want to speak to an experienced Louisiana bankruptcy attorney to learn about the options available to you, eligibility requirements and types of property exemptions.