File Chapter 7 Bankruptcy: What Happens to My Property?

At the time of a Chapter 7 bankruptcy filing in California, the property of the debtor is divided into exempt and non-exempt categories. Property and/or asset exemptions are determined based upon your financial situation, income, and the value of the property/assets listed in the filing. Due to the nature of the “means test”, which determines your eligibility to file for a Chapter 7 bankruptcy, in almost all circumstances your property and assets will be considered as exempt from surrender to the court. One of the biggest benefits of working with an experienced California bankruptcy attorney is that an analysis of your property/assets can be done prior to the filing to ensure that they will be considered exempt from surrender and that you will be able to keep them.

Determination of Exempt Property

The determination of exempt property and assets in a California Chapter 7 bankruptcy depends upon their assessed value and your financial circumstances. In California, there are two asset valuation formulas which can be employed to calculate whether property and assets will be considered exempt or non-exempt. Both formulas are based on the $100,000 homeowners’ exemption but differ greatly in terms of the valuation of other assets and property. Due to the complexity of each option and the importance of determining actual property/asset valuations, this is one of the many facets of the bankruptcy process where a qualified bankruptcy attorney can make a huge difference.

What About My Home?

In terms of your primary residence, it should also be noted that a Chapter 7 bankruptcy could actually help to save your home; especially if a foreclosure proceeding is in progress or about to begin. The filing of a Chapter 7 will stop foreclosure proceedings which can allow you extra time to catch up on missed payments. With the home exempted from surrender to the court, you will be able to keep it as long as you can catch up and then keep making payments.

Common Exemptions

A wide variety of personal property items are considered as exempt in a Chapter 7 filing as well. Personal property exemptions include vehicles, furnishings, personal effects, jewelry, social security payments, tools of your trade, retirement plans, in-force life insurance, personal injury awards, etc. Each asset exemption formula presents different valuation caps in its respective personal property category, requiring great care in the determination of the most beneficial option. This is yet another aspect of the bankruptcy process where an experienced bankruptcy attorney can have a substantial impact on your end result. For a free bankruptcy evaluation call the California bankruptcy attorneys at Zhou & Chini.

From the author: California Chapter 7 Bankruptcy Attorneys

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