Perhaps you've held onto your grandmother's jewelry collection for the last 30 years. Or maybe you have a restored classic car collection or vacation property. Nevertheless, if you're underwater with debt, it may seem Chapter 7 bankruptcy is your only option.
Will you have to get rid of everything you own? If you have a lot of property that isn't essential to your life, you might need to get rid of some of it as a part of the Chapter 7 bankruptcy liquidation process, especially if this property could be viewed as "luxuries" and is not essential to your life. However, you may also be pleasantly surprised to discover how much of your property you can actually keep.
Chapter 7 exempt property list
What follows is a list of items that are often exempt from the liquidation process during bankruptcy. Keep in mind that exempt property will typically be subject to specific value limitations. In other words, your Toyota might be exempt from liquidation because it's not a luxury car, but your Lamborghini or another kind of expensive luxury vehicle may have to go:
- Motor vehicles
- Clothing that is reasonable and necessary
- Household furnishings and other goods that are reasonable and necessary
- Household appliances
- Jewelry up to specific value limitations
- Retirement pensions
- Some of the equity in your home
- Tools you need for your trade or job
- Some of your unpaid earnings
- Public benefits like Social Security payments, unemployment compensation, welfare and other benefits that have accumulated in a bank account
- Personal injury damages payments
- Miscellaneous property that should be exempt for any number of reasons
Advocate for as many exemptions as possible
If you're contemplating filing for Chapter 7 bankruptcy and you have concerns about what property and resources you'll need to sell and what you'll be able to keep, learning more about Chapter 7 proceedings and exempt and nonexempt property will help you evaluate whether Chapter 7 is right for you and your family's future financial goals.