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Will I lose everything when I file for Chapter 7 bankruptcy?

| Sep 27, 2020 | Chapter 7 Bankruptcy

Living with debt can be stressful. When a Miami resident is faced with the inability to pay off their liabilities to their creditors, they may feel isolated and unsure of what to do. There are options under the law that may benefit them, and bankruptcy is one of them.

Bankruptcy is a broad term that involves different legal paths to eliminating debts. For individuals, Chapter 7 bankruptcy may be a useful tool for getting back onto stable financial footing. Chapter 7 bankruptcy involves the sale or liquidation of property in order to secure money for the repayment of creditors.

Liquidation during Chapter 7 bankruptcy

It likely sounds overwhelming to a debtor to have to sell off their property and possessions. The idea of losing everything that they call their own may sound worse than the stress and issue of dealing with creditors. However, liquidation during Chapter 7 bankruptcy is not comprehensive. A person who is going through the Chapter 7 bankruptcy is permitted to keep some of their property so that they can live their life after their bankruptcy is completed.

Exemptions during Chapter 7 bankruptcy

The assets and property that a person may retain when going through Chapter 7 bankruptcy are called exemptions. Common examples of exemptions may include a vehicle for use after bankruptcy proceedings, clothing and personal care items, some furniture, and appliances. In Florida, a debtor may protect the entire value of their home under the state’s homestead exemption. However, the size of acreage that the debtor’s home contains may impact its protection under the exemption law.

Even though a debtor does not have to sell off everything they own under Chapter 7 bankruptcy, the process can still be difficult to navigate. Many people work with trusted bankruptcy attorneys to help guide them through the many steps to bankruptcy discharge. This post is provided as information only and does not offer any legal advice.