When considering bankruptcy, one of the main concerns that people express relates to what property they can keep. It can be a daunting prospect to think about losing your home, your vehicle, your personal possessions and more. Fortunately, filing for bankruptcy protection does not necessarily mean that you will have to give up everything that is important to you.
Some property is exempt from the bankruptcy process. This means that even after filing, you may be able to preserve and protect certain property. If you have questions about exempt and non-exempt property or if fears about losing your stuff is holding you back, you will find it beneficial to speak with an experienced California bankruptcy attorney about your rights and options.
Exempt versus non-exempt property
If you file for either Chapter 7 or Chapter 13 bankruptcy, you will enjoy the protection of the automatic stay. This halts all further contact from lenders and creditors, including threats of foreclosure, repossession efforts and more. Depending on the type of bankruptcy for which you qualify and the terms of your bankruptcy plan, you may get to discharge certain property.
Exempt property, which is property that a bankruptcy applicant can typically keep, includes the following:
- Motor vehicles worth under a certain value
- Necessary clothing
- Necessary household goods, such as some furniture
- Household appliances
- Jewelry, up to a certain value
- Pensions
- A portion of the equity in the petitioner’s home
- Tools of the trade and stuff necessary for the person’s livelihood
- Public benefits
- Money awarded from a personal injury claim
It is quite possible that you will be able to keep most, if not all, of your crucial property during bankruptcy. However, there are certain things that are not exempt from discharge, and those include:
- Valuable collections, such as stamps
- Valuable musical instruments
- Family heirlooms
- Stocks and bonds
- Cash and savings accounts
- Second or unnecessary vehicles
- Vacation homes
Bankruptcy law is complex, and it can be difficult to understand your rights and options on your own. This is a serious financial and legal choice, and if you believe that it is the right step for you, you would be wise to first seek the counsel of an experienced legal professional.
Chapter 7 or Chapter 13 bankruptcy is not always the appropriate path for every person in debt. You will find great benefit in seeking a complete understanding of how you could potentially benefit from this step, as well as how you may be able to keep the property that is meaningful and important in your life.