How to Fill Out Bankruptcy Schedule C: The Property You Claim as Exempt

When you file for bankruptcy under Chapter 7 or Chapter 13, you must complete a packet of forms and file them with the court. Schedule C: The Property You Claim as Exempt ("Schedule C") is one of the most important forms because it tells the court what property you can keep or "exempt" under state or federal law.

Why You Must Complete Schedule C in Bankruptcy

You don't automatically get to keep property in bankruptcy. To keep the asset, you must claim exempt property on Schedule C. If you don't, you'll lose the property. You'll use Schedule C to tell the trustee, the court, and creditors what property you claim as exempt.

What Are Bankruptcy Exemptions?

When you file for bankruptcy, you can protect property needed to live and work, such as a modest car and reasonably-valued household furnishings. This property is called "exempt" property and your creditors can't take it from you.

The bankruptcy exemptions protecting property are the same regardless of whether you file for Chapter 7 or 13. However, what happens to "nonexempt" property not covered by an exemption depends on the chapter filed.

How Exemptions Work Under Chapter 7

While the bankruptcy trustee can't touch your exempt property, if you have more than what you're allowed, the Chapter 7 trustee can take it. For example, if your state allows you to keep one car and have two, the bankruptcy trustee can sell the second car and distribute the proceeds to your creditors.

How Exemptions Work Under Chapter 13

If you file under Chapter 13, instead of using your nonexempt property to repay your creditors, you use your income to fund a three- or five-year repayment plan. Because of this, you don't risk losing property, whether or not it's exempt.

However, exemptions are still important in a Chapter 13 case. If you use Chapter 13, you must repay your creditors at least as much as they would have received if you had filed under Chapter 7. In other words, you must repay them at least the value of your nonexempt property.

Property Usually Covered in Chapters 7 and 13

The exemption lists in most states include at least some equity in a home, a vehicle, personal belongings (such as clothing, furnishings, and jewelry), and the tools of your trade. Your state has a list of the property you can claim as exempt when you file for bankruptcy. Some states let filers use the federal bankruptcy exemptions instead of the state exemptions.

For more information on exemptions, read state bankruptcy exemptions.

What Information Will You Need for Schedule C in Chapter 7 Bankruptcy?

You should be as thorough and accurate as possible in claiming exemptions. The more property you can claim as exempt, the more property or income you will get to keep in your bankruptcy case.

List All Property on Bankruptcy Schedule C

You'll transfer all the property you can claim as exempt from Schedule A/B: Property onto Schedule C. In the first column, you'll list the item of property and the line the property appears on in Schedule A/B. You can lump together items of low value, such as kitchen items or clothing.

List the Property's Replacement Value on Bankruptcy Schedule C

In the second column, you'll list the current replacement value of the property, meaning what it would cost to buy the same item, in the same condition and of the same age. You can learn more about valuing property by reading Completing the Bankruptcy Forms.

Claim the Exemption Amount on Bankruptcy Schedule C

In the third column, you'll put the amount of the exemption you're claiming. Often, an exemption will allow you to protect up to a certain value or equity in your property. Some exemptions allow you to exempt certain types of property entirely, such as your clothing or your wedding ring. In this column, you usually list either the value of your property (from the second column) or the maximum value of the exemption, whichever is less.

Cite the Exemption Law on Bankruptcy Schedule C

In the fourth column, you'll need to insert the citation to the state or federal law that provides the exemption. In some states, you can choose between the state's exemption list and the federal exemption list. However, you can't mix and match some exemptions from one list and some from the other.

Some states allow you to use only the state exemptions. California allows you to choose between two lists of state exemptions. For links to each state's exemption list—which include the citations you will need to complete this column—as well as information on the federal exemption list, see Bankruptcy Exemptions - What Do I Keep When I File for Bankruptcy?

Navigating Your Bankruptcy Case

Bankruptcy is essentially a qualification process. The laws provide instructions for completing a 50- to 60-page bankruptcy petition, and because the rules apply to every case, you can't skip a step. We want to help.

Below is the bankruptcy form for this topic and other resources we think you'll enjoy. For more easy-to-understand articles, go to TheBankruptcySite.

We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.