What Can You Keep In Chapter 7 – If you’re thinking about filing for Chapter 7 bankruptcy, you’re probably wondering how much of your personal property you’ll be allowed to keep after filing for bankruptcy. Whether you can keep that signed painting, your coin collection, even your furniture, the thought of losing all your prized possessions can be a very scary thought. The answer to your question depends largely on the type of property you own, its value, and the bankruptcy exemptions you use.
After you file for Chapter 7, the court appoints a bankruptcy trustee who is given the authority to sell your assets to pay creditors. Fortunately, filing a BK does not mean you have to hand over all of your items, exemptions allow you to keep a certain amount of your personal property and the trustee cannot sell those items to pay creditors. How much you can keep and what you can keep depends on the value of the property and specific exemptions in your state or the federal bankruptcy code. Thanks to these exemptions, you’ll likely be able to keep most of your personal property.
What Can You Keep In Chapter 7
Each state and federal system has certain exemptions — some states require you to use these exemptions, while others allow you to choose between your state system or the federal system’s exemptions. Therefore, the amount of assets you protect depends entirely on the state in which you live. The following states allow you to choose whether to use the state list of exemptions or the federal bankruptcy exemptions. Obviously, you want to choose which system will benefit you the most. If you live in a state not listed below, you have no choice but to use the state exemption list.
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Now that you’ve decided which exemption system you’re going to use (either state or federal), you’ll need to fill out Schedule C — Property Claimed as Exempt — along with your other bankruptcy paperwork. On this form, you list all property and assets that are legally exempt.
Since each state has its own list of exemptions, let’s just review the federal list of exemptions. If you must use your state’s list, we recommend that you look up your state’s bankruptcy code online to see which property you can list on your C list. The following are the most important federal exemptions and the amount you can take. These amounts are adjusted for inflation every three years and the most recent adjustment was made on April 1, 2016.
As we noted earlier, when you file for bankruptcy, there are certain assets that must be turned over to the bankruptcy trustee to be sold to pay creditors. Below are examples of assets that a debtor must typically give up in order to be liquidated, with the proceeds distributed to your creditors:
If you have questions about what assets you can and cannot keep, the best advice we can give you is to seek help from an experienced bankruptcy attorney.
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We are committed to keeping your email address confidential. We do not sell, rent or lease our contact information or lists to third parties. You may think that when you file for Chapter 7 bankruptcy, you lose everything. Here’s why it usually isn’t.
When you file for bankruptcy, you are allowed to keep any capital assets that the court has determined are necessary for your fresh start.
When you file your bankruptcy filing start schedule, that’s when you claim real estate exemptions. If neither the trustee nor your creditors object to these discharge claims, they become final 30 days after your creditors’ meeting and are then no longer considered property of your bankruptcy estate.
Most Chapter 7 bankruptcy cases are no-asset cases. If your case is without assets, it means that you are not giving anything to the trustee for the following reasons.
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Exemption systems allow you to keep your daily living funds separate from creditor claims. Since the point of bankruptcy is to give you a fresh start, this is only possible if you have something to start over.
Used household items and personal items usually don’t have much resale value and therefore don’t bring in a lot of money to pay creditors.
Your pension or 401(k) retirement plan is not considered property in the bankruptcy estate. Because retirement plans are outside the estate, you don’t even need to claim an exemption to keep them.
If you have an IRA or other retirement savings, it MAY be an estate property, but they are also often tax-exempt. The first $1 million from your IRA, plus cost-of-living adjustments applied to the balance, is exempt under the bankruptcy code.
Can I Keep My House If I File For Bankruptcy?
This is one area where bankruptcy law can vary from state to state. Congress has allowed states to choose between following federal provisions or using state laws.
Twenty states allow debtors to choose whether to use the federal exemption law or their state laws. The remaining thirty states require the use of state laws.
Pennsylvania law allows debtors to choose between state and federal exemptions, giving debtors the ability to choose the system that best suits their needs.
If you own a home, make regular payments, and don’t have too much equity, you have a good chance of keeping your home. Other types of property you can hold include:
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I have recently moved. How long after moving do I have to wait before I can file for bankruptcy?
As a general rule, you must have lived in your new state for at least 91 days to file for bankruptcy in the new state. The court will verify your claimed state of residence based on the information provided in your bankruptcy plan. In the event of a dispute, you can use documents such as a driver’s license; voter registration; bank account statement; apartment rental agreement; or utility bill to show how long you’ve lived in the state.
To use state exemptions, you must have lived there for two years (730 days) to use that state’s exemptions. If you have not lived in that country for two full years, you must use the exemptions of your previous country of residence.
If you don’t meet the 730-day rule because you haven’t lived in the new state for at least 2 years, the 180-day rule applies. The 180-day rule covers your residence for the 180 days before you file for bankruptcy. In other words, where you lived for 910 days (730 + 180) before you filed for bankruptcy. Under the 180-day rule, you can use exemptions from the state where you lived for most of those 180 days.
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Example: You have lived in Pennsylvania for the past year. Before living in Pennsylvania, you lived in California for five years. You decide to file for bankruptcy on September 1, 2021. The court looks back 910 days to March 6, 2019 to see where you live and determine what state exemptions you can use based on where you lived at the time. So, in this example, look to California law to determine what exemptions you can use.
The values given in the statute refer to what you could get for the item on the market TODAY, not what you originally paid for it or should pay to replace it.
If your property is subject to a mortgage or lien, you calculate the value of the item after deducting the amount owed. Some liens can be avoided to create something called “exempt equity.” Ask your lawyer about this.
If you own property jointly with someone else who is not filing bankruptcy with you, the law only counts your share of the equity in that entity.
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You don’t have to do it alone – an experienced bankruptcy attorney will guide you through the process and make sure everything is done right – so you can finally relax. It’s free to chat with me about your options – you can call or text me at 215.551.7109 or email me. does not provide legal advice. The information presented in this article can be affected by many unique variables. Always consult a qualified attorney before taking action.
Whether you’re a borrower or a lender—and many real estate investors are both—a bankruptcy problem can ultimately affect you and your loan agreement.
But did you know there are six different types of bankruptcy? They are all designed for different situations and each modify debt covenants in different ways.
If you’re considering filing for bankruptcy or are concerned that your borrower may, here’s what you need to know about each.
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If a borrower can no longer pay their debts, our legal system provides rules that all parties must follow.
It begins when the borrower submits a