What Can You Keep if you File Bankruptcy?
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What Can You Keep If You File For Bankruptcy?

One vital concern to keep in mind as you weigh the costs and benefits of filing for bankruptcy is figuring out what you can keep if you file for bankruptcy. The primary factor in figuring out what you get to keep is whether you're filing for Chapter 7 or Chapter 13 bankruptcy. Beyond that, every state has a different set of bankruptcy exempt items.

If you'd like to ask a bankruptcy lawyer directly about bankruptcy exempt items and your ability to hang on to property when filing bankruptcy, fill out the following form. You can set up a free, no-obligation consultation with a nearby attorney today.

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How Chapter 13 and Chapter 7 Bankruptcy Treat Your Assets

There are plenty of differences between Chapter 7 and Chapter 13 bankruptcy, especially in the way to protect assets.

Chapter 13 bankruptcy, or reorganization bankruptcy, may be better for you if you're looking to retain as many of your assets as possible. You're not required to hand over any of your assets, but you do have to adhere to a consistent monthly payment plan for several years. This is useful for keeping more when you file for bankruptcy. However, not everybody qualifies for this form of bankruptcy – among other factors, you must have regular income, and enough disposable income above your cost of living that you can afford to make the necessary payments.

If you don't qualify for Chapter 13, you may be able to file for Chapter 7 bankruptcy. Under Chapter 7 bankruptcy, or "straight" bankruptcy, your debts are dismissed, but you may be forced to sell off your personal assets. Thankfully, state and federal laws provide some protection against sale, so you will likely get to keep some items through Chapter 7 bankruptcy.

Chapter 7 Exempt Assets: Figuring Out What You Can Keep in Bankruptcy

The assets you're permitted to keep in Chapter 7 bankruptcy vary according to state bankruptcy laws. However, there are some assets which are typically exempt to some degree under state laws:

  • Property/Housing: Typically state laws allow for some exemption regarding housing owned. However, it would be too simplistic to say you can keep your house if you file for bankruptcy – the level of the exemption varies heavily between states.
  • Automobiles/Transport: Most states will also exempt a personal car, especially if it is used to commute for work, though the value exempt again differs strongly.
  • Professional Necessities/Tools of the Trade: States will often exempt tools or necessities required to do your job. This definition differs by your field – for instance, a plumber would exempt their plumbing tools, while a professional musician would exempt their instrument.

There are plenty of other exemptions that may be included, but what's available differs wildly by state. A bankruptcy lawyer may be better able to inform you as to how the law applies to your specific situation and in your state. To find out more about what you keep when you file for bankruptcy, fill out the form below to set up a consultation with a bankruptcy attorney near you.

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