Bankruptcy exemptions keep some of your assets from being taken away from you. While some bankruptcy exemptions exist to protect your personal property, such as an automobile or home, other bankruptcy exemptions exist to protect a specific asset’s entire value or a portion of that value. The more bankruptcy exemptions you as a debtor are eligible for, the better off you will be in the long run.
There are some differences between Chapter 13 and Chapter 7 bankruptcy exemptions and the way they affect you, the debtor. Chapter 13 bankruptcy exemptions allow you to retain your property while you reorganize your debts. Something to keep in mind is the amount that you are required to pay each month depends on the property that qualifies as exempt. Having more exemptions allows you to reduce the amount that you have to pay to creditors.
Chapter 7 bankruptcy exemptions take the property that debtors currently own, sell it and pay down as much of their debt as possible. Unlike in a Chapter 13 bankruptcy, in a Chapter 7 bankruptcy the trustee has the power to sell personal assets. However, exempt assets cannot be sold by the trustee to pay off debt.
The amount of property that is eligible to be exempt depends largely on the overall value of the asset itself. Some types of bankruptcy exemptions include your primary vehicle; household goods and clothing.
Because bankruptcy exemption laws are subject to change, debtors or future debtors who would like to learn about possible exemptions that they may be able to qualify for should consult with a bankruptcy attorney.
Thought of the Day: “Everybody is all right really.” -Winnie the Pooh