If you’re gearing up to file for Chapter 7 bankruptcy, you’re probably worried about how much property you’re going to lose. In fact, you likely have visions in your mind that involve men in moving trucks coming to empty out your house, and later having your home taken away from you, too.
Fortunately, Chapter 7 bankruptcy exemptions may save you from having to experience something like this. Through various federal and Minnesota bankruptcy rules, you can probably keep a great deal of your personal property.
How bankruptcy exemptions work
Bankruptcy is intended to give you a fresh financial start, not leave you penniless and possessionless. In this regard, you’ll always be permitted to keep your essential possessions — like furniture, household goods, clothing, your vehicle and a certain amount of equity in your home.
Whatever property you can keep through your Chapter 7 liquidation process, the court will refer to as “exempt property.” You will need to claim this property as exempt in your bankruptcy proceedings. As such, you will want to familiarize yourself with what kinds of exemptions you can legally claim.
You will claim your exempt property through a document called Schedule C. Because your Schedule C will determine what you can and cannot keep, this is probably the most critical piece of paperwork — for your purposes — that you will file during your proceedings. You will want to make sure you’ve covered all your bases, and claimed as much property to be exempt as you’re legally able.
Every state has its own bankruptcy exemptions
Every state has its own set of bankruptcy rules about exemptions. Federal law offers guidelines on bankruptcy exemptions, too. In some situations, individuals can waive their state bankruptcy exemptions in favor of using the ones prescribed by federal law. Certain limits will apply to every category of exemption.
Ultimately, the goal of every borrower during his or her bankruptcy process should be to categorize as much of his or her property as exempt from liquidation as possible.