What Happens To My Non
If you have any non-exempt property, the trustee will decide whether it’s worth selling. You may be able to negotiate to keep certain non-exempt property by giving up exempt property instead.
If you have a non-exempt, secured loan, you must give the property back, pay it off, or reaffirm the debt.
A secured loan is a loan in which the borrower pledges some asset as collateral, such as a car loan or mortgage loan.
To reaffirm means that you agree that you will still owe it after your bankruptcy case is over.
What Kind Of Property Do Bankruptcy Exemptions Protect
Federal law and state laws protect a lot of the same kinds of property, including:
Personal property like household goods, furniture, and musical instruments
Real estate that’s your primary residence
Retirement accounts, including IRAs
Unemployment benefits, unemployment compensation, and workers’ compensation
Veteranâs benefits and other public benefits
Alimony and child support
Personal injury and crime victim awards
Essentially, bankruptcy law makes sure that your basic stuff is protected. Some state exemptions and the federal bankruptcy exemptions even include what’s called a wildcard exemption. A wildcard exemption can be used to protect property that’s not covered by another exemption.
What that means for you, depends on your stateâs law. If youâve lived in the same state for at least two full years, that stateâs law will tell you two things:
What is protected by the state bankruptcy exemptions
Whether youâre able to claim the federal bankruptcy exemptions instead
If you havenât lived in the same state for at least two years, check out this article on bankruptcy after moving and consider speaking to a bankruptcy lawyer about which set of exemptions you can use.
How Liens Impact Bankruptcy Exemptions
Note that exemption amounts refer to your equity in the asset. If you co-own the asset, only your share of the equity is relevant. If an asset is subject to a mortgage or a lien, your equity is the value of the item after deducting the amount of the lien or liens .
Imagine that you purchased a home that is currently worth $300,000 and you have an outstanding mortgage loan of $250,000. Your equity in the home is $50,000. If an exemption protects more than $50,000 of equity in your home, creditors cant touch it. Now imagine you bought the same home but only owe $75,000 on your mortgage loan. In that scenario, you have $225,000 of equity. Unless your states exemption protects more than $225,000 of equity, the bankruptcy trustee can sell your home, pay you the amount of the exemption, and give the rest to your creditors.
Generally, the trustee wont sell an asset if you only have slightly more equity than the exempt amount. Theyll only sell if you have enough nonexempt equity to make a meaningful payment to creditors.
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Can The Trustee Take Everything
Contrary to popular belief and what TV shows and movies often depict the bank cannot take the clothes off your back. Your bankruptcy trustee cannot sell items without value, nor can they sell things you need to live or work.
Exempt assets are assets the trustee cannot sell and may include:
- An older or inexpensive car
- Furniture and everyday clothing
- Tools required for your profession
- Health aids
- Your retirement accounts
When you file for bankruptcy, the court will use state and federal laws to assess your financial situation and your assets. In New Jersey, you can even choose whether you want state or federal laws applied to your case.
Although the laws vary by state, the federal government allows you to keep assets with the following values :
- $25,150 of equity in your home
- $4,000 of equity in your car
- $1,700 worth of jewelry
- Up to $13,400 worth of furniture, appliances, and clothing
- $2,525 for items essential to your business
- $13,400 in assets from a life insurance policy
- Things you need for your health
You may be thinking, wow, $4,000 is not a lot for a car, or my house is worth more than $25,000. If this is the case, know that you have other options.
File On Your Own With Upsolve
If you donât have anything that isnât protected by an exemption and canât afford to hire a law firm to help you file Chapter 7 bankruptcy, know that you donât have to hire a bankruptcy attorney to file your case. If youâre eligible, you can use Upsolveâs free web app to prepare your bankruptcy forms. See how it works in our 10-step guide on how to file bankruptcy for free.
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Bankruptcy Exemptions On Prince Edward Island
- No limit on clothing for you and your family
- No limit on medical or health aids
- Any motor vehicle needed for transportation to work up to $6,500, or up to $3,000 if not used for work
- Household furniture, utensils, equipment, food and fuel up to $5,000
- Tools used by you in your business or trade, up to $2,000
No One Loses All Of Their Property When Filing For Bankruptcy Find Out What You’ll Keep
By Cara O’Neill, Attorney
Don’t worryyou won’t lose everything in bankruptcy. But you might lose unnecessary luxury items, like your fishing boat or a flashy car, or have to pay to keep them. To prevent expensive surprises, you’ll want to learn:
- how exemption laws protect property
- what happens to items you can’t protect, and
- where to find your state’s exemption laws.
Once you’ve mastered this area, it’s a good idea to review some other things you should know about filing for bankruptcy. Or check out our quick ten-question bankruptcy quiz. It can help you spot potential bankruptcy issues fast.
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Keeping Your Property In Bankruptcy
One of the most common questions people ask before filing for bankruptcy is, can I keep my property? The short answer is that it depends on the type of bankruptcy you file , along with the type of property and the value of said property at the time of the bankruptcy. We previously wrote about the differences between Chapter 7 and Chapter 13 bankruptcy. In this article, we will discuss what real or personal property can be kept when filing Chapter 7 or Chapter 13 bankruptcy.
Farming Fishing And Aquaculture Exemptions
- If your primary occupation is farming, personal property used by you to earn income are exempt up to $10,000
- If your primary occupation is fishing, personal property used by you to earn income are exempt up to $10,000
- If your primary occupation is aquaculture, personal property used by you to earn income are exempt up to $10,000
Northwest Territories bankruptcy exemptions
In the Northwest Territories, property exempt from seizure in bankruptcy is set out in the Exemptions Act and applies to the equity in an asset. Equity is the difference between the value of the asset and what you owe on the asset.
Example: If you have household furniture and equipment in your home worth $5,000 and you do not owe any outstanding loans on these items, the equity you have is $5,000. In the Northwest Territories, the exemption for the total of these items is $5,000. In this case, you would be entitled to keep these possessions and your creditors cannot take them from you.
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Will I Lose All My Assets When I File For Bankruptcy
Contrary to popular belief, when you file for bankruptcy, you will not lose everything. Each province and territory has its own exemptions to the bankruptcy law that outline which of your assets, and how much equity, you are allowed to retain. There are also certain costs and processes that apply across the country. Lets take a look at them below.
An Alternative To Chapter 7 Bankruptcy
If you have a regular income and assets that you do not want to lose, you may want to consider Chapter 13 bankruptcy instead. This type of bankruptcy is also known as a wage earners plan because it allows you to make affordable payments for 3 to 5 years without liquidating your assets. Even if you cannot pay off your debts fully within your repayment period, you will not be responsible for the remaining debts.
At Busch, Reed, Jones & Leeper, P.C., we can help you file for Chapter 7 or Chapter 13 bankruptcy, and if youre not sure which option is best, we can discuss that with you, too.
We have more than 150 years of combined experience handling cases like yours, your first consultation is 100% free of charge, and we are committed to protecting your interests and helping you reach your goals.
If youre considering bankruptcy, please do not hesitate to call us at 629-0154 or contact us online and schedule your free, confidential case review!
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Exchanging An Exempt Asset For Nonexempt Property
Most debtors in Chapter 7 bankruptcy don’t have enough money to buy back a nonexempt asset from the trustee. If you want to keep a specific nonexempt asset, you can offer to give the trustee one of your other exempt assets in exchange. In general, whether the trustee will agree to accept a different asset in exchange for your nonexempt property will depend on the value of the asset and the cost and labor associated with selling each type of property.
Can I Use The Federal Bankruptcy Exemptions In Florida
For anyone that has conducted research on bankruptcy cases and exempt property, they will probably notice mention of Federal exemptions versus State exemptions. Each choice details a specific list of values you are allowed to keep. In the state of Florida, debtors are not allowed to use the federal bankruptcy exemptions, rather residents of the state must use the state exemptions. Federal bankruptcy exemptions, as well as state bankruptcy exemptions, protect specific property. In case you are curious as to the differences between federal and Florida state exemptions, here are the federal exemptions: The federal amounts are adjusted every three years in April, and if no dollar amount is stated, you can exempt the entire asset. The federal homestead exemption allows you to protect $22,975 of equity in your home, $3,675 for your automobile, $1,550 for your jewelry, $12,250 total on household goods, furnishings, appliances, books, clothing, animals, musical instruments or crops, $2,300 for tools of your trade, all health aids, all life insurance policies which have not matured, and $12,250 in the loan value of a life insurance policy .
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Alternatives To Filing For Chapter 7 Bankruptcy
You might consider selling your assets on your own and using the money to pay or settle your debts. Its more work for you, but it allows you to avoid having a bankruptcy on your credit report.
However, note that if you try to sell assets so you wont have to give them up in bankruptcy and you then later file for bankruptcy, your case may be affected. The court will analyze your intent in selling the assets and make a decision about whether you were trying to hide assets or defraud the court. The trustee may recover the sold assets, seize some of your exempt property, or even deny a discharge of your debts.
Certain kinds of debts, such as alimony, child support, student loans, and many kinds of taxes, will not be discharged following a Chapter 7 bankruptcy. Under some circumstances, federal, state, and local income taxes, including penalties and interest, can be discharged.
Chapter 13 bankruptcy is for those debtors who have steady income and are capable of making payments to their creditors over a period of three to five years using all of their disposable income. If you file for this type of bankruptcy, you develop a payment plan with the help of a . You must repay your creditors at least the value of your nonexempt assets, even though those assets won’t be liquidated.
Will The Bankruptcy Trustee Take My Nonexempt Property
The Chapter 7 bankruptcy trustee sells nonexempt assets and uses the sales proceeds to repay your unsecured debtlike credit card balances, medical bills, and personal loansthat isn’t secured by collateral. Bankruptcy exemptions don’t cover specific luxury items, such as fur coats and hobby equipment . So if you own an expensive artwork, it’s unlikely that you’d find an exemption to cover it.
Even so, you might be able to keep a nonexempt asset if one of the following applies:
- the trustee decides to abandon it
- you repurchase it from the trustee, or
- the trustee agrees to accept a different exempt asset in exchange.
Another option? File for Chapter 13 bankruptcy. Debtors can keep all of their property in a Chapter 13 case.
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What About A Chapter 13
If the debtor has regular income, it may make sense to think about a bankruptcy under Chapter 13. A bankruptcy under Chapter 13 allows the debtor to make a plan to pay certain debts. If the debtor successfully completes the plan, some unsecured debts can be discharged. Chapter 13 payment plans are typically three to five years long, and creditors cannot try to collect the debt during the plan period. The plan must either pay unsecured claims in full or provide that all of the debtors disposable income will be paid to the plan. Disposable income is income, except child support, minus living expenses. There are rules that govern what income counts and what expenses are deducted to figure disposable income. A bankruptcy trustee oversees the plan.
Determining The Exempt Status Of Property Under Chapter 7
In a Chapter 7 liquidation case, the debtor has to turn certain property over to the bankruptcy trustee so that the property can be sold and the proceeds used to pay off debts. Debtors, whether they are businesses or individuals, are often justifiably concerned about what property they will be allowed to keep and what they must give up. Experienced bankruptcy lawyers can clarify the exempt status of property, allay fears and keep the process moving forward as painlessly as possible.
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What Personal Property Can Be Seized In A Judgment
Personal property that can be seized in a judgment is the type of property that does not meet one of the numerous exemptions available under the Texas Constitution, Texas Property Code 41.001, Texas Property Code 42.002, Texas Property Code 42.0021, the Texas Homestead Law and other applicable laws. If that seems like a lot of legal protections, it is. Texas is a virtual stronghold of property protections from creditors and is one of the safest states to lose a judgment in the United States.
For most families, property that can be seized in a judgment is a small percentage of what people own. The type of property that can be seized may seem like a luxury to a person faced with collection efforts such as jewelry above a certain protected amount, a hunting or fishing cabin, a timeshare or other vacation home.
Repayment Plans & Property In Chapter 13
As suggested above, however, the process in Chapter 13 and its goals are not entirely the same as those of a liquidation bankruptcy. Chapter 13 involves debtors who have sufficient income and means, and who would like to establish a repayment plan to address their debts over time. This significant difference means that there isn’t as much of a reason to collect, redistribute, or sell a debtor’s property to pay off creditors because the filer intends to repay their debt over the duration of their repayment plan .
On the bright side, this means that the law usually lets a Chapter 13 filer retain possession of their property, with a few important exceptions. However, the debtor’s property plays an important part of figuring out how much they will have to repay. When figuring out a debtor’s repayment plan, the value of their non-exempt property is used to establish a sort of “baseline” for purposes of repaying creditors.
In other words, if a debtor owns non-exempt property worth a particular total amount, X, that total X is the minimum that the debtor must offer in their plan of repayment.
For this reason, in particular, it is important for bankruptcy filers to learn about the applicable property exemption laws for their jurisdiction, what kind of exemptions they can claim for their property, and how to go about properly claiming exemptions.
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Bankruptcy Exemptions: What Property Can You Keep In Chapter 7 Bankruptcy
When you file for Chapter 7 bankruptcy, almost all of your property becomes property of the bankruptcy estate. That doesn’t mean you lose everything. The purpose of bankruptcy is to provide people with a fresh startand part of that fresh start is keeping the things you need to hold down a household and job. Bankruptcy exemptions allow you to keep the things you’ll need to work and live, such as furniture, dishes, clothing, and a car.
How much property you can exempt differs depending on which state you live in because each state has a set of exemption laws .
Example. If you own a car worth $5,000 and your state allows a $6,000 car exemption, then you can keep your vehicle. However, if you live in a state that only allows a $2,000 car exemption , then the bankruptcy trustee may take your car and sell it. From the proceeds of the sale, the trustee will pay you the exemption amount of $2,000 and distribute the rest among your creditors.
How Does The Treatment Of Non
A consumer proposal is the most common alternative to personal bankruptcy in Canada. In fact, it is the solution most Canadians use to deal with their debts.
Just like in the case of bankruptcy, a consumer proposal offers debt relief and provides legal protection from creditors. A consumer proposal can stop collection calls, a wage garnishment and lawsuits.
The main difference between the two is that you can keep all your assets with a consumer proposal, including non-exempt assets.
A consumer proposal is a legal agreement to settle your debts for less than you owe, in exchange for which you agree to make pre-arranged payments to pay off the settlement amount. While you do not lose assets in a proposal, the value of your non-exempt assets will affect how much you will need to offer your creditors.
Consumer proposals are much simpler than bankruptcies, and the terms are determined upfront. Your payments can be spread out over a period of up to five years, making your monthly payments more affordable than a bankruptcy if you have significant non-exempt assets you wish to keep.
The goal of filing for bankruptcy, or making a proposal to creditors, is to get debt relief when you reach a point where you cant pay off what you owe on your own. Bankruptcy is not punitive, but instead it eliminates almost all your unsecured debts and allows you to start fresh
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