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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 Chapter 7 bankruptcy exemptions are, how they work and what they can do for the filing party.

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