Under Chapter 7 Bankruptcy there is property that is exempt from the Bankruptcy. Exempt property is property which Bankruptcy Law considers protected and allows you to keep. There are specific categories of exempt property. And different categories have different dollar amounts for the amount of property that can be exempted or protected. You can exempt any property that falls into one of the exemptions categories, up to the dollar amount allowed. Under bankruptcy law married couples filing jointly each get to claim a full set of exemptions, unless otherwise noted.
If property is exempted, you will be able to kept this property after you file bankruptcy. In most cases, all of your property will be exempt. But property which is not exempt is sold, with the money distributed to creditors.
An exemption limit applies to any equity you have in the property. Equity is the difference between the value of the property and what is owed on the property. For example, a car valued at $5000 with a loan of $4500 has an equity value of only $500.
Property is secured if there is a loan on the property and the creditor has a security interest in the property. If the property is secured by a loan, such as a car or home, and you are current on the payments, the equity is covered by your exemptions, and you elect to keep making payments on the loan you generally can keep this property through the bankruptcy.
However, if all the equity is not covered by your exemptions the trustee may elect to liquidate this asset and distribute the assets. Generally, in this case, you would be entitled to the value of your exemption in the asset as a cash payment.
If you are thinking about filing for bankruptcy, or want to discuss what exemptions are available in Bankruptcy, please call to speak to an experienced bankruptcy attorney at Hurst & Hurst Law at (859) 209-2101.