Protecting Your Property When Filing for Bankruptcy
One of the biggest concerns people have about bankruptcy is whether they will lose their home, car, savings, or personal belongings. Fortunately, bankruptcy laws provide exemptions that may allow you to protect certain property while obtaining relief from overwhelming debt. At CN Bankruptcy Law, we help clients understand available bankruptcy exemptions and how those protections may apply to their individual financial circumstances.
What Are Bankruptcy Exemptions?
Bankruptcy exemptions are laws that protect certain property or a specified amount of equity from being used to satisfy creditors during bankruptcy. The exemptions available to you can depend on where you live, how long you have lived there, the type and value of property you own, and other factors.
Depending on applicable law, exemptions may protect some or all of your interest in assets such as:
- Your primary residence
- Cars and other vehicles
- Household goods and furnishings
- Clothing and personal belongings
- Certain retirement accounts
- Tools used for your profession or trade
- Certain insurance benefits
- Other qualifying property
Exemption rules can be complex, which is why evaluating your assets before filing bankruptcy is important.
Bankruptcy Exemptions in Chapter 7
In Chapter 7 bankruptcy, exemptions can play an important role in determining which assets you may keep. A bankruptcy trustee reviews your property and financial disclosures as part of the case.
When property is fully covered by an applicable exemption, it is generally protected from liquidation by the bankruptcy trustee. If an asset contains substantial nonexempt value, however, it could potentially be sold for the benefit of creditors.
Before filing Chapter 7, a bankruptcy attorney can review your property, liens, equity, and available exemptions to help you understand what may be protected.
Bankruptcy Exemptions in Chapter 13
Exemptions also matter in Chapter 13 bankruptcy, although Chapter 13 generally does not involve liquidation of property in the same way as Chapter 7.
The value of nonexempt property can affect how much certain creditors must receive through your Chapter 13 repayment plan. Properly identifying and applying available exemptions is therefore an important part of developing a Chapter 13 strategy.
Planning Before You File
Getting the most from bankruptcy exemptions starts with a careful review of your finances before filing your case. Assets should be accurately identified, properly valued, and disclosed as required by bankruptcy law.
It is also important not to transfer, hide, give away, or sell property simply to keep it away from creditors or the bankruptcy trustee. Certain transactions before bankruptcy can create serious problems and may be reviewed or challenged during your case.
Proper bankruptcy planning focuses on legally using available protections while complying fully with disclosure and other requirements.
Understand What You Can Protect
Bankruptcy does not automatically mean giving up everything you have worked to acquire. Exemptions exist to provide qualifying debtors with protections that can help them maintain essential property while working toward a financial fresh start.
At CN Bankruptcy Law, we can review your assets and financial circumstances, explain which exemptions may apply, and help you understand how your property could be treated under Chapter 7 or Chapter 13.
Speak With a Bankruptcy Attorney
If concerns about losing your property are preventing you from considering bankruptcy, get the facts before making a decision. Contact CN Bankruptcy Law to discuss bankruptcy exemptions, your assets, and the debt relief options that may be available to you.
Bankruptcy exemptions vary by jurisdiction and individual circumstances. This information is for general informational purposes and should not be considered legal advice.
