If you’re an individual considering bankruptcy, you’re probably thinking about filing for Chapter 13 or Chapter 7. Chapter 13 is a great option for those who have a stable income, would like to retain their assets, and consider their debt to be manageable with the right restructuring. However, for those who have no income and/or wouldn’t be able to pay off their debt even with a restructured payment plan, Chapter 7 is the way to go. But, “What do I get to keep?” is the big question.
A Break Down
Essentially, your assets are categorized in two ways: exempt (usually essential items – you keep these), and non-exempt (superfluous or high-value items – you give these up). In order to really understand which of your possessions fall into each category, you should speak to your bankruptcy lawyer. But, this list should give you a general idea.
Exempt items include:
- Your car (up to a court-determined value)
- Necessary clothing, household goods, and furnishings
- Any wage that has already been earned, but has not yet been paid.
- Portion of the equity in your house.
- Damages you may have received because of personal injury.
- Any kind of public/government benefits (e.g. Social Security)
Non-Exempt items include:
- Cash, stocks, investments, etc.
- Second home (e.g. vacation home)
- Secondary vehicle
- Collections of valuable items
- Expensive superfluous goods (e.g. grand pianos). Exceptions may be made if you use these superfluous goods to generate income.
If you have specific questions about your property, you should speak with your bankruptcy lawyer to find out more about what is considered exempt and what is non-exempt!