What property is exempt in Chapter 7 bankruptcy?

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Question:

What property is exempt in Chapter 7 bankruptcy?

Answer:

When you file for Chapter 7 bankruptcy, certain types of property are exempt, meaning the bankruptcy trustee cannot take the property. For the most part, what property is exempt is determined by state law. 

How Do Exemptions Work?

A debtor is entitled to retain possession of any exempt items in bankruptcy as long as the value of those items does not exceed the value of the claimed exemption.  If the debtor's equity in the property significanlty exceeds the value of the claimed exemption, the bankruptcy trustee may sell the property, pay the debtor the value of the claimed exemption, and distribute the balance to the debtor's unsecured creditors.

What Property Is Exempt?

What property is exempt varies by state. Each state has a list of property that is exempt. Sometimes the entire value of the property is exempt, and sometimes the property is exempt only up to a certain dollar amount. Some states allow debtors to use the federal bankruptcy exemptions instead of the state exemptions.

Common Exempt Property in Bankruptcy

Most states have some type of exemption for things such as your home, motor vehicles, jewelry, tools of the trade, furniture, clothing, books, artwork, public benefits, and more. Most of these exemptions are limited by a dollar amount, however.

To learn more about how exemptions work, and for a list of exemptions in your particular state, see Bankruptcy Exemptions - What Do I Keep When I File for Bankruptcy?

Updated by: , J.D.

This site does not provide legal advice and users of this site should not interpret any of the information presented here as legal advice. The information provided merely conveys general information related to commonly asked legal questions. We are not a law firm and the employees responding to questions are not acting as your legal attorney. You should ultimately consult with a lawyer for your case.

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