What are bankruptcy exemptions?

Filing for bankruptcy can help the filing party enjoy a fresh financial start, however, individuals considering filing for Chapter 7 liquidation bankruptcy may feel anxious about the process and what will happen during it. It is important to understand when filing for Chapter 7 bankruptcy relief that certain property can enjoy exemption from the Chapter 7 liquidation process.

For filers who qualify, Chapter 7 bankruptcy provides the option to liquidate assets to repay debts and enjoy debt relief. Bankruptcy laws protect certain types of property in different ways. One way property may be protected is by category; the second way that property may be protected is by value or amount. In other words, value limits may apply to certain categories of property such as a home which is referred to as a homestead exemption which may allow the value, up to a certain amount, in particular personal property to be protected.

Additional types of bankruptcy exemptions can include automobile exemptions, jewelry exemptions and wild card exemptions to protect certain categories of property not otherwise protected or property that exceeds the maximum value limits for protection. Bankruptcy exemptions are determined by federal and state law so it is important for filing parties to be familiar with federal and state bankruptcy laws.

Different personal bankruptcy options, and the protections they include for filers, can help individuals struggling with the strain of overwhelming debt enjoy a fresh financial future. It is helpful for parties considering bankruptcy to fully understand the options available and which options may be best for them, their circumstances and goals.

Source: Bankruptcy.findlaw.com, "Bankruptcy Exemptions: Chapter 7," Accessed Dec. 16, 2015

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