In a Chapter 7 liquidation case, the debtor has to turn certain property over to the bankruptcy trustee so that the property can be sold and the proceeds used to pay off debts. Debtors, whether they are businesses or individuals, are often justifiably concerned about what property they will be allowed to keep and what they must give up. Experienced bankruptcy lawyers can answer these and other questions, allay fears, and keep the process moving forward as painlessly as possible.
Items that the debtor usually has to give up include:
- Expensive musical instruments, unless the debtor is a professional musician.
- Collections of stamps, coins, and other valuable items.
- Family heirlooms.
- Cash, bank accounts, stocks, bonds, and other investments.
- A second car or truck.
- A second or vacation home.
Certain types of property are exempt, however, which means that the debtor can keep them. Exempt property can include:
- Motor vehicles, up to a certain value.
- Reasonably necessary clothing.
- Reasonably necessary household goods and furnishings.
- Household appliances.
- Jewelry, up to a certain value.
- A portion of the equity in the debtor's home.
- Tools of the debtor's trade or profession, up to a certain value.
- A portion of unpaid but earned wages.
- Public benefits, including public assistance (welfare), social security, and unemployment compensation, accumulated in a bank account.
- Damages awarded for personal injury.
If you have questions about what property you will be allowed to retain if you file bankruptcy under Chapter 7 of the Bankruptcy Code, it is prudent to seek the counsel of an experienced and knowledgeable bankruptcy attorney who can respond promptly and accurately and put your mind at ease.