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Chapter 13 bankruptcy is a bit different than a Chapter 7 bankruptcy in several ways. One of those differences has to do with exemptions. While Florida has its own set of laws that classify the various properties that are exempt, there are several types of exemptions common to most states. These include a car exemption, house or homestead exemption, clothing and personal item exemption, and jewelry exemption.

While Chapter 7 bankruptcy focuses on liquidating almost all of the filer’s property, Chapter 13 bankruptcy is more about reorganizing their assets and creating a plan to pay back their creditors. Property that is non-exempt in a Chapter 7 bankruptcy can be sold by the court in order to pay the creditors off. With Chapter 13, there is no need to sell off the debtor’s property, since a payment plan has been established to make sure that creditors are paid. Chapter 13 bankruptcies are more common for those who have a steady income with which to make payments.

Since the debtor will be paying off the creditors, he or she can usually retain his or her assets, although there are some exceptions. So why are Chapter 13 exemptions important if the debtor can keep his or her property? What the debtor owns and what is exempt will actually determine how much money he or she will have to repay. The value of the debtor’s non-exempt property is the base-line for how much he or she will have to pay back to the creditors.

Of course, anyone who is considering a Chapter 13 bankruptcy could benefit from consulting with an experienced bankruptcy lawyer who can advise the client on which exemptions are valid in his or her state. Florida, as well as other states, have limits on the value of some of the exempt property. A car exemption, for example, would let a debtor protect up to a certain amount of the vehicle’s equity. A bankruptcy attorney can help determine which exemptions are applicable in the client’s case.

Source: findlaw.com, “Exempt Property in a Chapter 13 Bankruptcy“, Accessed on May 8, 2017