Property Can You Keep After Bankruptcy
You're afraid of filing for bankruptcy because you believe that you won't be able to keep all of your property after bankruptcy or so you have heard. You are terrified that as soon as you submit that paperwork, you'll discover that your home, car, and other possessions now belong in the hands of your biggest creditors.
The truth is that new bankruptcy laws make it possible for you to keep much of your personal property. Whether you're considering filing for personal bankruptcy or you're already making an appointment with your bankruptcy lawyer, here's what you need to know about the property you can keep after bankruptcy:
Exempt Property Under Federal Bankruptcy Law
So what exactly what property is exempt under federal bankruptcy law?
First, it's important to note that while the federal bankruptcy law sets the guidelines for what property is protected after bankruptcy (Bankruptcy Code 11 U.S.C. 552(b)), many states have their own versions of property exemptions. Be sure to contact a knowledgeable bankruptcy attorney to see what property is protected in your specific state.
Under federal law, here is the property that may be exempt from being sold to satisfy your creditors:
- Equity in your primary residence. This varies according to state; for example, in Texas, an unlimited amount of equity is exempt.
- Your car equity, up to $3,225. The equity is determined by examining the car's market value.
- Household items up to $10,775 (there is a maximum of $525 per item).
- Heirlooms and jewelry up to $1,225 in value.
- Life insurance, disability benefits, and other important policies.
- Retirement funds, including pensions, stock sharing plans, 401(k)s, and other retirement accounts.
Now that we've examined the property and assets you can keep after filing for personal bankruptcy, let's look at the property that may be used to satisfy any of your debts.
Non-exempt property will vary by state; however, as a rule of thumb, it's safe to assume that the following property could be used to satisfy your debts:
- Musical instruments (provided you do not make your living as a musician)
- Collections (including stamp, coin, and others)
- Cash, bank account assets, investments not related to your retirement account
- Second cars
- Second homes
Now that you know the surprisingly generous amount of property you can keep after filing for a bankruptcy, it's time to get in touch with your bankruptcy lawyer .