When considering the option of filing for bankruptcy protection, many people express concerns over what will happen to their stuff. You may think that if you file for bankruptcy that you will have to hand over your stuff to pay for your debts. This is not necessarily the case – you may actually be able to keep most of your personal property in Chapter 7 bankruptcy.
Chapter 7 is liquidation bankruptcy, which means it may require the liquidation of certain assets to pay off debts. However, bankruptcy laws provide certain exemptions, which is how you may be able to retain most of what is important to you. It may help to understand bankruptcy exemptions and what they may mean for your individual situation.
What exemptions are available to you?
The intent of bankruptcy is not to leave a person destitute. The intent of bankruptcy protection is to allow Texas applicants to seek relief from certain types of debt by following a court-approved plan. This is why bankruptcy laws provide exemptions for certain types of property. Personal property that you will likely be able to keep after filing for Chapter 7 bankruptcy include the following:
- Motor vehicles worth less than a certain value
- Furniture and appliances you need in your home
- Tools and equipment you need for your job
- Jewelry that is worth up to a certain amount
- Some of the equity you have in your home
- Your pension plans
- Unpaid wages and public benefits that you receive
- Damages you received in a personal injury settlement
While you may be able to keep most of the things that are important to you, Chapter 7 is liquidation bankruptcy for a reason.
What could you give up?
Certain types of property are non-exempt, which means you will not be able to keep them, including:
- Valuable musical instruments, unless you need them for your job
- Cash and various types of bank and financial accounts
- Valuable collections, such as gemstones or stamps
- Second vehicles or homes
Bankruptcy may be the right choice to secure a better financial future. By moving forward with filing for Chapter 7, you can deal with certain types of unsecured debt once and for all. It is prudent not to allow misconceptions about what will happen to your stuff keep you from taking smart steps for your future. It may be helpful to seek a complete evaluation of your case and an explanation of the options available to you before making any important decisions.