When a person files bankruptcy, it is basically a way to get protection from creditors. In Florida, as in all states, the proceedings are handled through the federal Bankruptcy Court, and the presiding judge will appoint a bankruptcy trustee. This trustee handles the selling of the bankruptcy estate property in a Chapter 7 proceeding, in order to pay off some or all of the filer’s debts. Not all property has to be liquidated, however. Rather, there are some bankruptcy exemptions and some properties which are not exempt.
The property which is exempt under Chapter 7 bankruptcy can also be called “necessities of modern life.” Some examples of exempt property are an automobile, clothing, furniture and household goods, appliances, pensions, jewelry, and tools of the debtor’s trade. All or a portion of the home’s equity, part of any unpaid but earned wages, any public benefits, and damages which were awarded in a personal injury case may also be exempt. Of course, the property such as cars, jewelry, clothing, and such must be reasonably priced and needed.
Expensive items such as musical instruments, stamp/coin/valuables collection, family heirlooms, a second vehicle, a second home, cash, stocks, bonds, bank accounts, and other investments are typically not exempt. These items must usually be relinquished by the debtor in a Chapter 7 bankruptcy. Of course, if the debtor is a musician, then his or her musical instrument might be considered a tool of the trade, and thus be exempt.
Items which are considered bankruptcy exemptions are left for the debtor to keep in order to help him or her to get back on his or her feet financially. Items which are not exempt are sold to help pay off the creditors. In Florida, those who are considering a Chapter 7 bankruptcy can benefit from contacting an experienced bankruptcy lawyer. The attorney can guide the client in how to file, and which type of bankruptcy would best serve his or her needs.
Source: findlaw.com, “Exempt vs. Non-exempt Property Under Chapter 7“, Accessed on April 7, 2017