What Are Bankruptcy Exemptions?

You may have heard that filing for bankruptcy will liquidate all your income and assets. While it is true in some bankrutpcy filings that the court may be able to liquidate some income and assets, each case is as unique as the individual themselves.

Generally, anything that has a value of $600 or less. This includes clothing, furnishings, appliances, household goods, and so on. However, this exemption does not cover cash or property used in a trade or business.

If you file for Chapter 7 bankruptcy, the trustee will liquidate most property of this kind. But if you file for Chapter 13 bankruptcy, you will be able to keep these assets.

What other assets are exempt in bankruptcy?

Generally, you can keep your car if it is worth less than $4,650. You may keep the equity in your home. This is known as the homestead exemption. If you are married, you can protect up to $125,000 of the equity in your home. This is known as the family homestead exemption.

You may also be able to exempt the equity in other types of property, such as a motor home, boat, or personal property.

What are nonexempt assets?

When you file for bankruptcy, you must turn over any nonexempt assets to the trustee. The trustee will liquidate these assets and distribute the proceeds to your creditors.

What are nonexempt assets?

Generally, the following are considered nonexempt assets:

• All cash you have.
• Any property you use in a trade or business.
• Any property of value given to you by a relative within the last two years.
• Any income you have earned within the last two years.
• Any property you transfer to someone else within the last two years.
• Any property you give away within the last two years.
• Any property you hide or spend within the last two years.

For more information about bankruptcy exemptions or to learn how a  Houston bankruptcy lawyer can help you obtain as many exemptions as possible, call our office at (713) 979-2279.