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.
