For some people, filing for Chapter 7 bankruptcy is the best way to get a fresh financial start. There are many advantages to Chapter 7. It will let you hang on to future income, you’ll be able to discharge debts and you won’t have to adhere to a repayment plan. As with any bankruptcy options, there are some drawbacks. A Chapter 7 filing may remain on your record for up to 10 years and you may have to give up some property to help pay debts.
However, the creditors and courts can’t just come in and indiscriminately take everything you own. There are items that are exempt and other that are not. First, let’s look at the property that’s commonly considered non-exempt:
- Family heirlooms.
- Valuable collections, such as coins, cards or stamps.
- A second vehicle.
- A second home.
- Cash, investments and stocks
- Musical instruments, unless you make a living as a musician.
Thankfully, the list of exempt items is a bit longer:
- Your car, up to a point.
- Clothes you need.
- Furniture and household items that are considered necessary.
- Appliances like refrigerators, stoves and water heaters.
- Some of the equity from your home.
- Jewelry of a certain value.
- Any tools necessary for your work.
- Personal injury compensation.
- Any public assistance like unemployment, welfare or social security.
This is just a broad overview. The process of Chapter 7 bankruptcy can be long and complicated, so having an experienced attorney by your side can be an invaluable help along the way.