No one wants to admit that they are dealing with financial problems. Many hope that if they ignore them long enough, that they will just fix themselves. Unfortunately, that rarely happens. What is even worse is that financial problems that go unaddressed have the tendency to get unmanageable. When a debtor has maxed out credit cards, medical bills piling up or suffered a job loss, it can seem impossible to ever get a handle on their finances. While it may not sound like the most appealing option, filing for bankruptcy can be a real option.
The problem so individuals have with the bankruptcy process is how it will impact their assets and property. No one wants to see everything go away in order for his or her debt to get erased. Thus, it is important to understand what bankruptcy exemptions are and how they could apply to your situation. With regards to Chapter 7, this is known as the liquidation bankruptcy. It essentially means that assets are sold off to pay off as much debt as possible.
How do bankruptcy exemptions work in Chapter 7? While exemptions are not the same for Chapter 13, a Chapter 7 can offer various exemptions that can help ease the bankruptcy process. To begin, there is a homestead exemption. This protects a certain amount, usually around $20,000. There is also an automobile exemption. This exemption limit is around $3,000 of the vehicle’s value. Finally, there are personal property exemptions. With these, there are per item limits as well as total limits. This includes items such as clothing, furniture, appliances, jewelry and other similar items.
Dealing with debt is anything but easy. It can be even more challenging seeing personal property go as a means to make debt go away. Therefore, it is important to understand how certain property and assets can be protected from the bankruptcy process. This not only helps protect the filer and their rights, but it also helps ease the process in general.