What Can You Keep When Filing For Bankruptcy?
If you file for bankruptcy under United States laws, you are eligible to keep some of your properties and assets provided that they follow the conditions set forth by your state or the bankruptcy court to which you had made your application. These exemptions differ for each of the chapters under Title 11 of the United States Code that deals with bankruptcy petitions, but they all basically guarantee that the debtor can still retain his properties and assets and eventually use them to pay off whatever he owes to his lenders or creditors.
Chapter 7 Conditions
If you file for Chapter 7 bankruptcy, there are conditions that are to be met on what asset or property you can keep, be it your house, car, personal effects, pension, or others. By declaring it exempt, you will get to keep your property during and at the completion of the bankruptcy proceedings. If it is considered to be non-exempt, then the court or trustee is empowered to sell your property to repay your lenders or creditors. If you are under Chapter 13 bankruptcy, any property that you keep depends on your ability to pay unguaranteed and secondary creditors throughout the duration of your plan.
Every state has its own bankruptcy exemption proceedings and they must be followed if you file for bankruptcy and creditor protection. Almost all states have one set of exemptions; California, however, has two. The bankruptcy exemption for each state is different from the other and debtors should always consider this when filing their bankruptcy applications.
Generally, you can get to keep your property if it is appraised at equal or less the state bankruptcy exemption. The trustee determines which property you can own and which property he can sell. He will make expenses during the selling of your property, and he would not be able to sell anything you own that has an equity that does not exceed much of the state’s bankruptcy exemption.
Applying for a bankruptcy exemption in your state should depend on two factors:
- If your permanent home or domicile is located in your state for at least two years, you are eligible to apply under your state’s bankruptcy exemption.
- If you had not lived in your own state for at least two years, then you will find it more difficult to apply for the exemption.
There is also a specific condition if you wish to keep your homestead or real property. If you bought your home within the state and have lived in it within 40 months before you filed for bankruptcy, the homestead or real estate exemption that is applicable to you is set at 146,450 dollars. This does not apply, however, if you acquired your home using the earnings that you made from the sale of another home within your own state.
In Chapter 7 bankruptcy, before you file for bankruptcy exemption, you must first need to know what property you wish to keep by listing them all in an inventory and determining the replacement value for each of them. After you have done this, you can then check the value of your property to that set by your state’s bankruptcy exemption if there are any that are applicable. If there are two bankruptcy exemption systems that currently exist in your state, you should do the same process for each system for you to ascertain which system will let you keep the property that you want.
Andrew is an Internet junkie who likes to peruse the web for fun websites, interesting news, mindless pass times, and sometimes work. He usually can be found blogging for some bankruptcy lawyers in Lebanon, PA.