Bankruptcy contains a set of laws called exemptions that determine what assets you are allowed to keep when you file bankruptcy. Even though bankruptcy is governed by federal law with their own set of exemptions, you can “opt-out” of federal exemptions and choose the state you live in’s exemptions instead. Your state’s exemptions may be more generous than the federal ones. You must choose one or the other, but you cannot use both the state and federal exemptions.
Your exemptions will vary by state, and some states have specific caps on the dollar amount that you can use for your assets. Both state and federal exemptions usually include:
- Enough living expenses to support you and your family
- Personal property
- Qualifying retirement accounts
- Wildcard exemption allowing you to exempt whatever you choose up to a specific dollar amount
Chapter 13 Bankruptcy
If you have a property that you wish to keep that will not be protected under the exemption laws, you may want to file Chapter 13 bankruptcy. Chapter 13 allows you to keep all of your assets and make a court-approved repayment plan for a period of three to five years, depending on your income and amount of debt.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is considered a liquidation bankruptcy. Your trustee will sell your nonexempt items to distribute to your creditors. Most of the time, you will not lose any assets in Chapter 7 due to the exemptions you are allowed, or the trustee does not feel they could sell your assets to satisfy the creditors. Chapter 7 usually takes three to six months to complete.
When you finish your chapter 7 or your chapter 13 bankruptcy cases, all of your remaining qualifying debt will be eliminated. If you have questions about your property during bankruptcy contact a Fort Worth bankruptcy attorney.