If you are filing for Chapter 7 bankruptcy, you may be pleased to learn there are ways to decrease the odds of your most valuable possessions being liquidated. There are a number of exemptions in place that serve to protect the things you hold most dear, such as your home, car, and some financial assets, and our bankruptcy lawyers can help you determine which exemptions apply to your individual financial situation. The following is a list of those exemptions and how you can use them to keep your valued possessions through your bankruptcy claim.
Can I Keep my Home?
When beginning the bankruptcy process, a question that weighs heavy on the minds of many is whether or not they will lose their house. Fortunately, the home is one of the most protected assets you have during bankruptcy. The exemption rate related to the home is $150,000, meaning that amount of equity in your home is entirely untouchable by the bankruptcy. If your home is worth $175,000, then only $25,000 is legally usable by the bankruptcy trustee.
Higher value homes can also be protected by a distribution of exemption and equity, so if your home falls far above the exemption limit, it may be in your interest to speak with a bankruptcy lawyer about protective measures.
Can I keep my Car?
Vehicles are also conditionally protected by exemption laws. $6,000 of your car’s equity is exempt and untouchable. If you are disabled, that exemption rises to $12,000. If you have little equity in your car or its value falls at or below the $6,000 limit, there is little chance it will be confiscated for liquidation. More equity, however, means more value to the trustee, so if you would like your car immune to seizure, work with a professional to determine how this is best accomplished.
Can I keep my Furniture?
Your household appliances and furniture also carry with them an exemption. This exemption is up to $6,000 and can be applied to any pieces you deem fit. When you list your desired exemptions, declare the value of the property you would like held exempt and your intent to preserve it.
Can I keep my Retirement Fund?
Retirement accounts that are tax exempt, including 403(b)s, 401(k)s, and simple IRAs, are entirely exempt from collection and distribution during a Chapter 7 proceeding.
Can I keep my Pensions?
Police officer, firefighter, disability, state retirement, and Roth IRAs are all exempt from seizure during a bankruptcy.
Stop Wage Garnishment
The idea of garnished wages is an unpleasant one. Many times, before filing for bankruptcy, wages will be collected as payment for debt before they even enter into the employee’s bank account. One of the benefits of bankruptcy is that this stops entirely. When the initial petition is filed, the automatic stay prevents any wage garnishments from continuing. This endures throughout the bankruptcy proceeding and extends to the courts and trustees, as well. No wages will be forcibly taken from you in an effort to pay debts under Chapter 7 laws.
Up to six months of food and fuel expenses are immune from being seized as assets to pay off debt during your Chapter 7 case. This means certain funds you have saved may be protected, and you can continue to live decently while you are under bankruptcy to get your financial life back on track.
The above are but a few of the examples of exemptions in. There are many more, and some can be relatively far-reaching. To obtain an exhaustive list or to get an assessment of what pieces of your property could likely stand exempt from Chapter 7’s liquidation procedures, contact one of our knowledgeable bankruptcy attorneys today. We are open seven days a week with extended hours to serve you and answer any questions you may have concerning the bankruptcy process.