What happens to your personal property in Chapter 7 bankruptcy?

One of the most common reasons why some New York readers are hesitant to file for bankruptcy is because they have fears over what this step will mean for their personal property. There are misconceptions that upon filing for bankruptcy, a person will have to give up most possessions, but that is not true. It may surprise you to learn that you will probably be able to keep most of your stuff, even if you seek bankruptcy protection.

If you are facing overwhelming debt you cannot manage on your own, it may seem like there is no way out. However, through bankruptcy, you may be able to deal with certain types of debt once and for all, securing a better financial future for yourself. If fears of losing your stuff are holding you back from moving forward with bankruptcy, you may want to learn more about property exemptions.

Will they take my stuff?

Chapter 7 bankruptcy is liquidation bankruptcy, which means that you will likely have to relinquish certain assets for liquidation. The proceeds will go toward your debts. However, bankruptcy laws allow for exemptions for many types of personal property. This means it is likely you will be able to keep a large portion of your stuff. Exempt property includes:

  • Things you need for your job
  • Reasonably necessary furniture and appliances in your home
  • Vehicles worth less than a certain amount
  • Your jewelry collection, up to a certain amount
  • Personal vehicles worth up to a specific value
  • Most of your earned yet unpaid wages
  • A certain amount of equity you have in your home
  • Damages awarded to you in a personal injury settlement
  • Clothes necessary for you and your family

You may be under bankruptcy protection, but the intent of this process is not to leave you destitute and without the things you need for daily life. This is why there are various types of exemptions available to people seeking assistance through Chapter 7 bankruptcy.

The right choice for you

Bankruptcy is not the right choice for every situation. However, it does provide some people with the ability to deal with certain types of debt. If you think this might be the best way to secure your financial future, it may help to seek an explanation of eligibility requirements for Chapter 7 and what you need to do to move forward with this step.