While personal bankruptcy options provide protections to struggling consumers, Chapter 7 bankruptcy exemptions provide an added layer of protection that may address concerns filing parties may have with the bankruptcy process.
Chapter 7 bankruptcy exemptions
It is important for anyone who has filed for Chapter 7 bankruptcy protection to be familiar with what Chapter 7 bankruptcy exemptions do. The bankruptcy process is not intended to force the filing party to begin from scratch and there may be protection for some types of property during the Chapter 7 liquidation bankruptcy process including:
Homestead exemption: a homestead exemption can be used to protect some of the equity in the filing party’s home. Homestead exemptions vary by state, so it is important for the filing party to be familiar with what the homestead protection is in their state.
Car exemption: the car exemption can also protect some of the value in the filing party’s car.
Personal property exemption: The personal property exemption protects different types of personal property including clothing, jewelry, home furnishings, appliances and other types of personal property in some instances.
Tools of the trade exemption: an exemption to protect the tools of the trade that the filing party uses in their occupation is an important exemption to be aware of.
Wild card exemption: a wild card exemption, when and where available, may be able to protect certain categories of property that are not already protected by a specific exemption category or property that has reached the limit for the property category and is in excess of that limit. It is important to note that there can be limits on exemption categories.
As with the homestead exemption, all exemptions and their availability can vary by state so it is helpful for filing party’s to be familiar with Chapter 7 bankruptcy exemption protections where they live. Making the decision to file for bankruptcy is a big one which is why understanding the different layers of protection is useful.