Are you planning to use Chapter 7 bankruptcy, and feeling worried about your assets being liquidated as part of it? You may not be aware that you actually get to keep many assets due to the rules regarding exemptions. Your bankruptcy attorney will help by having you list all of your assets, and then categorizing them into things that are exempt and not exempt. Here are a few of those exemptions that you should be aware of.
1. Your Vehicle
One of the main assets that you may get to keep is your vehicle. It is common for each licensed driver in a household to be able to have one car that they can keep, with any additional cars potentially being liquidated. Your state may also have a dollar limit that dictates if you get to keep your car. For example, if the state limit is $5,000 on vehicles and yours is worth $9,000, then the bankruptcy trustee will sell the car for $9,000 and write you a check for $5,000. If your car is worth less than the limit, then you will be able to keep your vehicle.
2. Your Home
The ability to keep a home is very similar to keeping a car. You'll be given a dollar amount based on your state laws for how much of your home can be exempt. If the home is worth less than that amount, you can keep the home. If the home is worth more than that amount, then you must sell the home and be written a check for the maximum exemption.
What makes a home unique is that there are certain factors that can increase the exemption amount. For example, being a senior citizen or handicapped can raise the exemption amount to its maximum value, while living with someone that is a senior or handicapped will increase the exemption cap by a smaller amount. If you have a lot of equity in your home and can't increase the exemption cap, it may make more sense to use Chapter 13 bankruptcy.
3. Your Retirement Funds and Household Goods
The nice thing about retirement funds is that there is no limit to how much of it is exempt. You can rest assured that your retirement income will be safe, even if you go through a bankruptcy. Another category that does not have a limit on exemptions is household goods and furnishings. You'll be able to keep all of the assets that you own for your home, even if you have to sell it.
Contact a bankruptcy attorney to learn more about your legal options.