What are Chapter 7 bankruptcy exemptions and how do they help?

On Behalf of | Feb 17, 2021 | Uncategorized |

Chapter 7 bankruptcy is an important legal resource for consumers facing financial struggles and looking for options to help. Chapter 7 bankruptcy is a liquidation bankruptcy option that includes the liquidation of non-exempt assets to repay creditors. Because some assets are considered exempt from the process, it is important to understand which assets that might include.

Assets that are exempted from the Chapter 7 liquidation bankruptcy process are referred to as exempt assets. Exempted assets can help filing parties as they exit the bankruptcy process and enjoy a fresh financial start with some of their assets. Chapter 7 bankruptcy exemptions include:

Homestead exemption

One of most significant worries filing parties may have is their home. The homestead bankruptcy exemption can provide an exemption for a certain amount of equity in the filing party’s home. The homestead exemption can vary so the filing party should be familiar with the exemption where they are filing for bankruptcy protection.

Vehicle and personal property exemptions

Another concern that can be significant for filing parties is their means of transportation. The vehicle bankruptcy exemption can provide an exemption for a certain amount of value in the filing party’s vehicle.

Personal property exemptions can provide additional protections to filing parties. Some examples of personal property that may be protected include clothing, jewelry, home furnishings, appliances and other personal property in some circumstances.

Wild card exemptions

Because there are limits to the exemption categories and only certain categories of exemptions exist, wild card exemptions may be available for property falling outside of the specified categories or those that are over the cap placed on a particular category. The availability and nature of specific wild card exemptions can also vary so filing parties should be familiar with the wild card exemption options that may be available to them.

When seeking bankruptcy protection, some filing parties may be worried about starting over which is why they should be aware of the bankruptcy exemption process. Bankruptcy can potentially help with some of the major worries struggling consumers face which is why it is worth thoroughly understanding how bankruptcy protections may be able to help.