Beebe and O'Neil

Can you keep anything when you file for chapter 7 bankruptcy?

If you are drowning in debt in Connecticut and feel you have no other options, you may be considering filing for bankruptcy. In a chapter 7 bankruptcy, the trustee takes many of your assets and sells them to help pay down your debt. However, there are some exemptions about items you are able to keep. 

The United States Courts states the purpose of bankruptcy is to give debtors a fresh start, and in chapter 7 bankruptcy the courts discharge some or most of an individual's debts to help. In bankruptcy filings, the debtor must submit a list of all creditors, property, monthly living expenses and sources of income. The court then determines what items to liquidate to pay down unsecured debts and then discharges the remaining debt.

According to FindLaw, some property is exempt from the liquidation process, which means the debtor can keep them. Because this can be a complicated process, bankruptcy filers should always hire an attorney to help them and maximize the number of things they can retain. If you own a home, this is exempt up to a certain amount. In Connecticut, this amount is $75,000, which you can calculate by subtracting the amount of mortgage you owe from the value of the home.

Certain types of personal property are exempt. This includes items such as:

  • Furniture
  • Appliances
  • Clothes
  • Jewelry

There may be an exemption limit for each item. If you own a car, you may not have to give it up, but there is also a cap on the exemption amount. 

 

 

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