In both Chapter 7 and Chapter 13 bankruptcy, you are allowed certain possessions to be exempt from creditors. Each state has its own laws to determine what property is exempt. Exempt property cannot be taken by creditors or your trustee to be sold and that money distributed to your creditors.
Federal or State Exemptions
If your state allows it, you may be able to choose the federal bankruptcy exemptions instead of your states if they are more favorable to your situation.
Typical exempt items are:
- clothing
- household goods and furnishings
- household appliances
- most jewelry
- part of the equity in motor vehicles
- life insurance
- part of the equity in your home
- personal effects
- Public benefits
- pensions
- unpaid earned wages
- tools that you need to perform your job
Some exemptions depend on how long you have lived in the state you are applying for bankruptcy in. Some exempt property is capped at a specific dollar amount, and any value after that is not considered exempt. When deciding the value of a property, the trustee will go by the current value and not what you owe initially paid for an item.
If you would like more information on what of your property would be exempt, contact a Houston bankruptcy attorney today.