Bankruptcy Exemptions & Your Property

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Bankruptcy exemptions are a very important part of every bankruptcy case. Exemptions are a set of dollar amounts that protect the equity in your various pieces of property from creditors in a bankruptcy case. Some of the most common and important exemptions protect the equity you may have in your home, your car, your retirement assets and your public benefits. Each state offers it's own dollar amounts on a wide variety of personal property, and some states allow you to use the federal bankruptcy exemptions.

In Chapter 7 bankruptcy, the exemptions determine what property is safe from liquidation by the bankruptcy trustee. For example, if you own a home worth $300,000 and have a loan of $275,000, then your states "homestead" exemption would need to be $25,000 or more to keep your home safe.

In a Chapter 13 bankruptcy, the exemptions play an important role in determining how much of your unsecured debt (credit card debt, medical bills, etc.) must be repaid through your repayment plan. If your states exemptions cover all of your equity, then your plan may exclude much of these debts, which would then be discharged upon the completion of your repayment plan.

See the article below to learn about how bankruptcy exemptions work.