Keeping Property When Filing for Bankruptcy

A common misconception about filing for Chapter 7 Bankruptcy is that you will lose everything and have to start completely from scratch. When you file for Bankruptcy, your attorney will organize property into non-exempt and exempt property. Property that is nonexempt will be sold by the Bankruptcy Trustee to pay your unsecured creditors, whereas you can keep exempt property.

Exemptions Explained:  "Exempt" property is property you can keep when filing for Bankruptcy. The Bankruptcy Code allows you to exempt, or keep, your basic assets so that you can have a "fresh start." Exempt assets generally include (but are not limited to):

Equity in home and automobile (up to a certain value)
Necessary clothing, furniture, appliances
Jewelry (up to a certain value)
Life insurance (up to a certain value)
Tools of your trade/profession (up to a certain value)

An experienced Bankruptcy attorney will exempt the appropriate property in the petition. If there no objections are filed as to the exemptions, they will become final 30 days after the first meeting of creditors. This means that the property is no longer property of the bankruptcy estate.

If after discussing your needs with a Bankruptcy attorney, you discover that Chapter 7 Bankruptcy will not permit you to keep to treasured property then you should consider filing for Chapter 13 Bankruptcy instead.

From the author: Ann Arbor / Ypsilanti Bankruptcy Lawyer Lander McLoyd

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