As many people know, bankruptcy law provides filers with a list of exempt property. In Chapter 7 bankruptcy, filers are allowed to keep a certain dollar amount of exempt property from being liquidated. This is to help filers get back on their feet faster by not stripping them of all their belongings. If the process of property exemption is done correctly, it can potentially protect most of a filers belongings.
Although exempt property is generally termed “necessities of modern life,” it does extend past what many filers believed to be a necessity. There are, however, many items that cannot, under normal circumstances, be exempt in Chapter 7 bankruptcy.
As one would expect, expensive collections are not exempt under bankruptcy law. These may include stamps, jewelry and coins. Likewise, expensive musical instruments not used as a main source of income are also considered non-exempt property. Understandably, large amounts of cash, bonds, stocks and other investments, including bank accounts, are considered non-exempt and will likely be seized by the bankruptcy estate.
Families and individuals that have a second home, second vehicle or vacation home may also have those properties seized during a Chapter 7 bankruptcy. Surprisingly enough, family heirlooms are not considered exempt and may also be seized by the estate. As worrisome as this is, each case is different, and discussing specifics with an attorney can help individuals identify all property that is at risk of being seized.
Working with an attorney can help bankruptcy filers better understand the exemption process. It is important to include all assets and property when filing bankruptcy, but an attorney can help filers exercise the full protection of bankruptcy law’s property exemptions.