Chapter 7 bankruptcy exemptions and how they protect filers
Chapter 7 bankruptcy allows the filing party to enjoy a fresh financial start but does not require them to start from scratch. Chapter 7 bankruptcy exemptions provide important protections for filing parties to be familiar with and understand how to take advantage of.
Chapter 7 bankruptcy exemptions
Chapter 7 bankruptcy exemptions exempt certain types of property from the Chapter 7 liquidation bankruptcy process including:
- Homestead exemption – a certain amount of equity in the filing party’s home may be protected;
- Car – a certain amount of value in the filing party’s car may be protected;
- Reasonably necessary clothing may be protected;
- Jewelry, up to a certain value, may be protected;
- Reasonably necessary household goods and furnishings may be protected;
- Household appliances may be protected;
- Pensions may be protected;
- Tools of the filing party’s trade may be protected;
- A portion of unpaid but earned wages may be protected;
- Personal injury award damages may be protected; and
- Public benefits may be protected.
Wildcard exemption
In addition, a wildcard exemption may be available in certain circumstances when the property the filing party is seeking to protect does not fall under a specific category or exceeds the limit set for that category. In general, Chapter 7 bankruptcy allows the filing party to liquidate non-exempt assets to repay creditors and enjoy debt relief. Chapter 7 bankruptcy exemptions can protect some property from that process which is why it is vital to be familiar with what the bankruptcy exemptions are, how they work and what they can do for the filing party.
