One of the biggest fears associated with filing for bankruptcy is the fear of loss. While one is facing severe financial struggle, it can be scary to realize that there’s a chance you’ll be losing most of your property. Filing bankruptcy under Chapter 7 means that you’ll be gathering your property and assets, and you’ll be preparing to sell these items to pay off as much debt as possible before the rest of the charge is eliminated. Fortunately, bankruptcy law protects certain kinds of property from being sold during this process. These are called exemptions, and it’s vital to know what exemptions you’ll have.
What Are the Exemptions?
Every state has its own set of bankruptcy exemption laws, so it’s important to know which specific exemptions apply to your state laws. However, there are some common bankruptcy laws that any person interested in filing for bankruptcy should be aware of:
1. Homestead exemptions: There are certain bankruptcy exemptions that will help protect your home. This is probably the most important exemption to be aware of, because the loss of one’s home is usually the main piece of property that bankruptcy filers are worried about. D.C. and Maryland have very amounts that are limited to homestead exemptions, so make sure you’re aware of your individual maximum total.
2. Vehicle exemptions: Your car can also be protected, but just like with homestead exemptions, there will usually be a cap on the amount of the vehicle’s value that will be covered.
3. Personal property exemptions: Lastly, you can protect certain personal items, and thankfully many types of personal property are automatically exempt from becoming part of your bankruptcy estate. These items could include clothing, furniture, home appliances, jewelry and more.