Properties Exempted Under Bankruptcy Chapter 7

Chapter 7 bankruptcy is to aid an individual in the discharge of certain debt. After the bankruptcy proceedings, the debtor is no longer held accountable for paying any discharged debts. It is important to note that not all debt can be discharged, and there is no guarantee that all debts will be relieved of the debtor's liability.

More importantly, Chapter 7 bankruptcy is a process that allows a debtor's assets or properties to be liquidated by a bankruptcy trustee. The proceeds from the sale of property is then given to creditors in order to pay off debts owed. However, not all of the debtor's assets or properties have to be liquidated. There are properties exempted under bankruptcy Chapter 7.

Properties Exempted Under Bankruptcy Chapter 7

• A portion of unpaid/earned wages
• Jewelry of a certain value
• Pensions
• A reasonable and necessary amount of cloths
• A reasonable and necessary amount of furniture and home goods
• Home appliances
• Personal injury settlements
• A portion of the debtor's home equity
• Government benefits (welfare, social security, unemployment)

On the other hand, there are properties that are non-exempted under bankruptcy Chapter 7. Therefore these assets are eligible for liquidation under the Chapter 7 bankruptcy code. Such assets include:

- Family heirlooms
- Second home or vacation home
- Second car or truck
- Coin, stamp, antique collections
- Expensive musical instruments (unless the debtor's profession is a musician)
- Cash on hand, bank accounts, stocks, bonds, or other investment types.

What Is The Process For Determining Exemption vs Non-Exemption?

When a debtor files a Chapter 7, a U.S. Bankruptcy trustee is assigned to the case. The role of the bankruptcy trustee is to liquidate the non-exempt assets, as well as oversee the case. Among other documents, the debtor must provide the bankruptcy trustee with a statement of assets and liabilities. Ultimately, the debtor will also file a schedule of exempt property.

This is to assist the bankruptcy trustee in determining the properties exempted under bankruptcy Chapter 7. However, debtor's should be aware that there are federal and state law that mandates whether or not certain properties are eligible for exemption under bankruptcy Chapter 7. Most often, it is state law that determines exemption vs non-exemption distinctions. Therefore a debtor should consult a bankruptcy attorney for more information on their particular state's list exemptions.