As you might know, filers using chapter 7 can be subject to property losses in some cases. However, not everything is vulnerable to the bankruptcy trustee's powers of seizure. Read on to find out what might be vulnerable, what is protected, and how filers can use exemptions to protect property.
What Can be Seized?
The law says that some items exceeding your state's exemptions can be taken. When that occurs, the property is sold and the funds are used to pay some of your bankruptcy administration expenses and sometimes, a creditor. Here is a list of items that can be seized in some circumstances:
- Homes that exceed a certain value (taking into consideration how much is owed on the mortgage).
- Vehicles, recreational vehicles, boats and trailers, ATVs, motorcycles, and more.
- Jewelry, art, and collectibles.
- Furs and high-dollar clothing and accessory items.
- Precious metals, bank and savings accounts, money market accounts, bonds, and other investments.
What is Protected?
Each state offers exemptions and that allows filers to keep much of the above property. Each state has different exemptions, however, so speak to your bankruptcy lawyer about what to expect with your property. In many cases, your primary residence, one vehicle, work materials, heirloom jewelry, and more are either exempted entirely or exempted partially. In many cases, a filer's retirement accounts are protected but only up to a certain amount of money. In most cases, a filer's income from a job is protected also.
How to Use Exemptions
Exemptions are useful but it helps to know how to use them to your best advantage. For instance, those who recently moved to a new state can often use the exemptions from a previous state. Since state exemptions vary, your previous state's exemptions might be better than those of your current state of residence. However, there are rules regulating how long you can use those previous exemptions. Here is what else to know about exemptions.
- Those who are married and file chapter 7 jointly can sometimes double their exemptions. However, not all states offer that benefit.
- Most states offer specific exemptions on real estate (homesteads), vehicles, and more. However, many states also offer a so-called wild card exemption. This is a sum of money that may be used to exempt value from anything the filer wants to exempt.
- Finally, some states allow filers to choose between state exemptions or federal exemptions.
Speak to your bankruptcy lawyer and find out how exemptions work in your state. Your lawyer can help you understand what you can keep as you move forward with your chapter 7 case.Share