Addressing debt problems does not mean completely changing your life. Filing for bankruptcy does not equate to giving up everything. While this does mean making major financial decisions and giving up some things, it also allows filers in Florida and elsewhere to maintain ownership of certain items. However, it is not always clear what one can keep as an exemption during the bankruptcy process.
Exemptions during bankruptcy
When an individual files for a Chapter 7 bankruptcy, they are often under the impression that they must give up much of their property, as this is known as a liquidation bankruptcy. However, this is not the case. Certain property does not need to be turned over and the individual could maintain ownership of it due to bankruptcy exemptions.
Each bankruptcy situation is different; however, exempt property is typically the same from one filing to the next. This includes personal motor vehicles up to a certain value, reasonably necessary clothing, reasonably necessary household items and furnishings, jewelry up to a certain value, pensions, a portion of equity in a home, tools related to one’s trade or profession up to a certain value, a portion of unpaid but earned wages, public benefits such as welfare, social security and unemployment compensation and damages awarded in a personal injury case.
Unfortunately, debtors who have filed for bankruptcy will have to let go of certain property. These items are deemed non-exempt property. This includes a second personal vehicle, a second home, family heirlooms, cash, bank accounts, stocks, bonds, other investments, collections of stamps, coins an other valuable items and expensive musical instruments, unless one is a professional musician.
The decision to file for bankruptcy is not an easy one. Thus, one is likely thinking in all directions, making it difficult to fully understand the process, how it will immediately impact them and what his or her future will look like. Therefore, it is imperative that one takes the time to understand what options one has, especially when it comes to maintain certain property during and after bankruptcy is complete.