The feeling of struggling with debt day after day can be overwhelming. Consumers who have considered turning to Chapter 7 bankruptcy for debt relief may have heard of bankruptcy exemptions and wondered what they are. Bankruptcy exemptions are another protection that consumers considering bankruptcy relief should be familiar with.
What are Chapter 7 bankruptcy exemptions?
A Chapter 7 bankruptcy exemption designation is an important one because property that falls within this designation can be shielded from the Chapter 7 liquidation bankruptcy process. Chapter 7 bankruptcy is a liquidation bankruptcy process during which the filing party’s assets are sold to repay creditors. Property that falls within an exemption category is not included in this process. Chapter 7 bankruptcy exemptions can include:
- Cars up to a certain value;
- A portion of the equity in the filing party’s home;
- Reasonably necessary clothing;
- Reasonably necessary household goods and furnishings;
- Household appliances;
- Jewelry subject to a certain value;
- Tools that are used as part of the filing party’s trade or profession subject to a certain value limit;
- A portion of earned but unpaid wages;
- Public benefits including public assistance, social security and unemployment benefits; and
- Personal injury damages or a personal injury award.
In addition, wild card exemptions may be available for property that does not fit into one of these categories or exceeds value limits so filing parties considering bankruptcy should be familiar with the availability of the wild card exemption. Bankruptcy protection can help relieve the stress of debt while also providing protections for some of the filing party’s property as they rebuild their life and a debt free future.