What Property Can I Keep if I File Bankruptcy?

Tue, Jul 19, 2011


Bankruptcy can be extremely complicated. The circumstances surrounding one are so fraught with emotion that tensions run high and people become intimidated. One of the most asked questions that SmithLaw receives is what property can a debtor keep after a bankruptcy filing. The answer varies from situation to situation of course, but usually includes a set standard of items and money depending on the bankruptcy type. Let us divide this question by the type of bankruptcy being filed by most individuals, Chapter 7 and Chapter 13.

Chapter 7 Bankruptcy

Most courts agree that items essential for living need to be kept by individuals. Florida law traditionally exempts $1000 in personal property for things like furniture, clothing, knick-knacks, and similar items. This number also includes cash. When determining the worth of other types of personal property, the courts measure value based of market value. For typical household goods, this means that often things are worth a lot less than they originally were at the time of purchase due to depreciation, which helps the owner of this property immensely. The internet can also be a valuable resource in establishing the value of many types of personal property, such as through eBay or Craig’s List.

If you are not claiming or benefiting from a homestead, you get an additional $4,000 in exemption towards personal property.

$1000 of your automobile’s equity is also excluded. A good source to start looking this up is the Kelley Blue Book or NADA. The vehicle will need an appraisal, so that is also something to keep in mind and be prepared to obtain.

Important financial assets like retirement monies, 75% of money from wages, government benefits, veteran benefits and social security are protected.

Secured debts also can be excluded from bankruptcy; but this depends on the case, the type of debt, and preference of the debtor.  The lien, however, held by the secured creditor usually survives a chapter 7.  Homes are usually protected but this might vary by situation, so please consult with an attorney if home ownership is involved in your case.

Chapter 13 Bankruptcy

This type of bankruptcy is different in that it usually involves repayment of loans over time and is elected in an effort to keep property. This can include home loans, car loans, and many other types of loans. Usually there is no surrender of property unless the debtor wishes to surrender property up front in order to begin paying back the debts. However, if someone elects Chapter 13 and then cannot pay back the debts on time, their property can still be seized for repayment.

Hopefully this post eases your mind about what property you might lose to a bankruptcy. A skilled attorney is imperative in most bankruptcies in order to catch the fine nuances of the situation and help you protect as much of your assets as you can.


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