Chapter 7 bankruptcy generally involves liquidation of a filer’s assets. This leads many people to think that they’re required to turn over all of their belongings to the court to be sold off to pay creditors. This isn’t the case though. The U.S. Bankruptcy Court classifies the property as either exempt or nonexempt when deciding what can be kept or what must be sold.
Property that falls into the exempt category is anything that would generally be referred to as necessities. A portion of the equity in your home, unpaid wages, personal injury damages and pensions all are considered as exempt property. Unemployment, Social Security and public assistance that may be accumulated in a bank account may be exempt as well.
Tangible assets such as clothing, a car, jewelry and household furnishings or appliances may also qualify as exempt property, provided that their value doesn’t exceed a certain amount. Tools needed for you to carry out your profession may be exempt also.
Any property that a debtor usually has to give up in bankruptcy is referred to as nonexempt property. The types of property that generally fall into this category are vacation or second homes, a secondary automobile, valuable coin or stamp collections, musical instruments and family heirlooms. Debtors may also have to turn over stocks, bonds, bank accounts and cash when their Chapter 7 bankruptcy case is adjudicated as well.
While filing for Chapter 7 bankruptcy can provide you with the debt relief that you’re looking for, it puts you at risk for losing valuable assets that may be sentimental to you and your family. A Chapter 7 bankruptcy attorney can review a listing of your assets and let you know what you stand to lose when you file. Your Norwich lawyer can also advise you of other debt-relief options that you may be able to pursue in Connecticut if you want to hold on to what you have.