Filing for Chapter 7 bankruptcy can inspire significant concerns for individuals who are worried about the fate of their property. The thought of losing one’s home, car or personal belongings can be daunting. Thankfully, understanding the ins and outs of Chapter 7 bankruptcy can help to largely alleviate these fears.
The Chapter 7 bankruptcy process is designed not just to provide relief from debts but also to do so in a way that allows individuals to keep essential assets to facilitate a fresh start. It’s also important to keep in mind that non-exempt assets are only sold to repay creditors in a very small fraction of Chapter 7 bankruptcy cases.
Exempt and non-exempt property
Exemptions are specific laws that protect certain types of property up to a certain value, so they cannot be taken and sold to pay creditors. These exemptions vary by state and cover a wide range of assets.
While many of your assets can be protected through exemptions, non-exempt property—items that exceed the exemption limits or do not qualify—may indeed be at risk. Property that may be sold to repay creditors typically includes luxury items, second homes and particularly valuable investments not shielded by exemptions.
Navigating Chapter 7 successfully
While the risk of losing some property is a concern that should be carefully considered, you’re statistically very likely to be in a position to retain ownership of all of your property. With that said, it can help to seek out personalized feedback before committing to this opportunity. In the event that Chapter 7 bankruptcy is a good fit for you, navigating the process successfully can afford you a fresh financial start.
