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Exempt vs. Non-exempt Property Under Chapter 7

The thought of filing for bankruptcy can be frightening to many people. The stress of limited finances and creditor harassment can cause some to make poor choices, but these choices may only worsen an already serious situation. The way to avoid making further mistakes is to contact a bankruptcy law attorney who knows the right steps to take at every juncture of the process.

Chapter 7 is the most common type of consumer bankruptcy. The idea that it is too difficult to file after the 2005 laws passed is a myth. You can still achieve debt relief through Chapter 7. Contact Florida attorney Norm Schroeder to see what your options are.

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Chapter 7 is a straight bankruptcy where you surrender your assets, and your unsecured debts are discharged.

Unlike what many people think, you will not lose everything you own in bankruptcy. Do not let myths keep you from talking with a West Palm Beach bankruptcy lawyer.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.

Exempt vs. Non-exempt Property Under Chapter 7

In a Chapter 7 liquidation case, the debtor must relinquish certain property to the bankruptcy trustee so that he or she can sell the property and use the proceeds to pay off debts. Property of the bankruptcy estate is broadly defined in the Bankruptcy Code. 11 U.S.C. § 541. The bankruptcy estate is technically the legal owner of all of the debtor's property and consists of all legal and equitable interests that the debtor has in property at the initiation of the bankruptcy case. Income that the debtor earns after the date of the petition is not included in the bankruptcy estate. Debtors, whether they are businesses or individuals, are often justifiably concerned about what property they will be allowed to keep and what they must give up. A bankruptcy lawyer at Norman L. Schroeder, II, P.A. in Lake Worth, FL, can answer these and other questions, allay fears and keep the process moving forward as painlessly as possible.

Non-exempt property

Items that the debtor usually must forfeit include:

  • Expensive musical instruments, unless the debtor is a professional musician
  • Collections of stamps, coins and other valuable items
  • Family heirlooms
  • Cash, bank accounts, stocks, bonds and other investments
  • A second car or truck
  • A second home or vacation home

Exempt property

A debtor must file a schedule of exempt property with the court. Exempt property is property that the debtor can protect from liquidation. The Bankruptcy Code allows each state to adopt its own exemption laws, which the debtor can select instead of the federal exemptions. It is important to consult with an attorney who can explain the exemptions available under your state's laws and how they compare to the available federal exemptions.

Exempt property typically includes:

  • Motor vehicles, up to a certain value
  • Reasonably necessary clothing
  • Reasonably necessary household goods and furnishings
  • Household appliances
  • Jewelry, up to a certain value
  • Pensions
  • A portion of the equity in the debtor's home
  • Tools of the debtor's trade or profession, up to a certain value
  • A portion of unpaid but earned wages
  • Public benefits — including public assistance (welfare), social security and unemployment compensation — accumulated in a bank account
  • Damages awarded for personal injury

Speak to a bankruptcy lawyer

If you have questions about what property you will be allowed to retain if you file for bankruptcy under Chapter 7 of the Bankruptcy Code, it is prudent to seek the counsel of an experienced and knowledgeable bankruptcy attorney. Contact Norman L. Schroeder, II, P.A. in Lake Worth, FL, today to schedule a consultation.

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Norman L. Schroeder, II, P.A.

Palm Beach
6803 Lake Worth Rd Suite 306
Lake Worth, FL 33467
Phone: 561-642-8884
Toll Free: 888-345-4059
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