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Exempt property in a Chapter 7 bankruptcy

If your financial troubles are causing you to consider filing for bankruptcy, you might be hearing some well-meaning – albeit misguided – advice from your friends and family. For example, they may tell you that you’ll lose everything in a Washington, D.C., bankruptcy. What will happen to your home, cars and personal belongings? The lawyers at the Ammerman & Goldberg "Bankruptcy" Law Office are prepared to help you hold onto as much of your assets as possible, no matter which type of bankruptcy you are going through.

According to Cornell University Law School’s Legal Information Institute, it is true that your personal property can be taken by the courts, sold and distributed to repay some of what you owe your creditors. However, bankruptcy law is also set up to protect the interests of debtors as much as possible. You should have a few bankruptcy exemptions to work with so you’re not left with nothing. These may include:

  • A federal homestead exemption to apply to a certain amount of equity in your home
  • Equity applied to one motor vehicle, especially if it is necessary for employment
  • Jewelry up to a certain amount in value
  • Tools of your trade, usually up to a certain amount
  • Furnishings, household items, clothing and appliances of ordinary value
  • Retirement funds if placed in a tax-exempt account

As you can see, even after a liquidation bankruptcy like Chapter 7, you have a good chance of retaining most, if not all, of your personal items. You would be much less likely to be allowed to keep a second vehicle, a vacation home and luxury items not deemed necessary, which could go toward repaying your debt.

To learn more about home and vehicle repossession in a personal bankruptcy, as well as exempt and non-exempt property, visit our page by clicking here.

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