There are many myths about bankruptcy, but one that we hear often is that people think they will lose their home and other assets if they file.
At Tom Bible Law, the overwhelming majority of our clients lose no assets when filing for bankruptcy. This is because we are experienced with bankruptcy law and know the exemptions that are allowed so that the people who file for bankruptcy can keep certain kinds of property.
How to keep assets after bankruptcy
After filing for bankruptcy and having debts discharged, you are ready to move on and start again. To do that though, you still need basic assets and possessions. Bankruptcy law recognizes this, and it is why there are exemptions in the federal Bankruptcy Code as well as in state bankruptcy statutes. An exemption is property you get to keep after filing for bankruptcy.
Exemptions do vary from state to state, but in many states, you can choose between a state exemption and the federal exemption system. Again, this is an area where an experienced bankruptcy lawyer is crucial to your success in keeping assets.
When you file for bankruptcy, you are required to include a list of all your assets, including a list of each item you are claiming as exempt, and the fair market value of each one.
Your bankruptcy trustee and creditors get a chance to review any property you claim as exempt and object to it if they have sufficient grounds. In most cases, it is clear which property is exempt and which is not. Notable bankruptcy exemptions include houses, cars, and tools of the trade that are needed for work.
Here is a more in depth look at possible exemptions:
- Excluded property — Some assets are completely excluded from the bankruptcy process by federal law. This includes pension rights and 401(k) plans, as well as IRAs up to $1 million. Social Security benefits, unemployment benefits, disability benefits, veterans benefits, and alimony or support payments are also excluded from bankruptcies.
- Wage exemption — Under Chapter 7, any wages earned after you file for bankruptcy are not considered part of your bankruptcy estate.
- Homestead exemption — This protects some or all of the equity in your home, as long as it is your primary residence. You must have owned the home for at least 40 months in order to claim a homestead exemption.
- Auto exemption — Most states offer an exemption for all or part of your equity in one or more cars. The federal auto exemption is $3,775.
- Household goods exemption — You need certain items to survive, such as your furniture, clothing, appliances, and medical supplies. Federal law exempts up to $12,250 of household goods, as long as no single item is worth more than $575. There are limits, such as you typically cannot keep multiple televisions, art (unless you created it), recreational vehicles, and other items that are considered non-essential.
- Wild card exemption — Federal law and many state laws offer a “wild card” option. This can cover any property or can be added on to any other exemption. It’s a way to potentially protect items that are important to you but would otherwise be subject to liquidation.
To fully understand what is exempt in a bankruptcy, it is important to have your case reviewed by a qualified bankruptcy lawyer, such as those at Tom Bible Law. Our attorneys will work with you personally to help you achieve your debt relief goals, while keeping as much property as possible under the law.
Discover Tom Bible Law in Chattanooga, TN
If you are struggling with excessive debt and looking for a sound solution, the attorneys at Tom Bible Law, can help you explore your legal options. We have helped numerous clients from Chattanooga and throughout Tennessee and North Georgia achieve their debt relief goals by guiding them through the bankruptcy process. We work with every client personally, giving each and every bankruptcy case the time and attention it needs. We understand the financial pressures our clients are facing and work to resolve their debt problems in a favorable, cost-effective manner. Our bankruptcy lawyers have more than 80 years combined experience and are here to help. Call us today at (423) 690-7712 or drop us a note here.