What Can I Keep When I File for Bankruptcy?


The short answer to this complicated question is that it all depends on the type of assets you have and the chapter you file for. There are some significant differences between filing for a Chapter 13 and a Chapter 7 bankruptcy, which can impact what you are allowed to keep and what you will have to part with. To understand what you are making the right choice for your circumstances, make sure that you schedule a consultation with a skilled bankruptcy attorney. You do not want to make any uninformed decisions when going through this process, or you could jeopardize the clean slate you are trying to pursue.

What is Exempt and Non-Exempt?

Generally, there are certain types of property that, regardless of the chapter you are filing for, will likely be exempt, including:

  • Furniture, kitchenware, bedding
  • Clothing
  • Small amounts of jewelry
  • A modest car
  • Tools of your trade, which you need for work
  • ERISA-qualified retirement accounts
  • Your home

Non-exempt assets or property that you will likely be unable to protect includes:

  • Exotic vehicles
  • Boats and watercraft
  • Real estate other than your home
  • Recreational vehicles and airplanes
  • Valuable furniture and artwork
  • Investment and savings accounts
  • Mineral interests that are not associated with your home

Protecting Property in a Chapter 7 Bankruptcy

Your bankruptcy trustee will sell any of your non-exempt property and distribute the proceeds among your unsecured creditors. Not all of your unsecured debts are treated equally, however, so the trustee will disperse the funds according to the priority of each creditor. In some cases, it is possible for you to buy back your non-exempt property from the trustee at a discount. If you owned a non-exempt asset that was worth $15,000, the trustee might reduce the price by the amount it would take to sell the property. This means you could potentially pay under $10,000 to get your asset back.

It is also important to keep in mind that exemptions are not automatic, so if you neglect to take the proper steps to claim property as exempt, you could potentially lose it anyway.

Keeping Your Property in a Chapter 13 Bankruptcy

In a Chapter 13 bankruptcy, the trustee will not sell your non-exempt property. You can keep it all as long as you pay your unsecured creditors the value of your non-exempt property. This means that once the value of your non-exempt property is tallied up, you will be expected to pay at least that amount to your unsecured creditors over the course of your three or five-year repayment plan. You are essentially paying for the right to hold onto your non-exempt property. If you cannot afford these payments, you can choose which non-exempt property to sell and only pay the value of what remains.

Bedford Bankruptcy Attorney

If you are considering your options for bankruptcy, make sure you seek skilled legal help to prevent making any costly mistakes that could jeopardize your financial future. At The Law Office of Mark B. French, our bankruptcy legal team is here to provide exceptional guidance as you pursue a clean slate and begin the process of rebuilding your financial health.

Get started today and contact our law firm at (817) 381-9855 to schedule a consultation with an experienced bankruptcy attorney.

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