Exempt and Non-Exempt Property
If you are considering filing for Chapter 7 bankruptcy, then you should familiarize yourself with the concepts of exempt and non-exempt property. Under Chapter 7 insolvency (also known as liquidation bankruptcy), your non-exempt assets are liquidated and used for paying off debt. You are allowed to keep exempt property. Before filing, you should make note of which pieces of property you may have to give up during the process.
Exempt Property
Exempt property includes all items that cannot be taken away from an individual and given to creditors. Typically, the following items are considered to be exempt during the time of insolvency:
- A car, up to a certain value
- Necessary clothing and household goods/appliances/furniture
- Some jewelry
- A certain amount of cash
- Certain tools of one’s trade, such as books or instruments
- Public benefits
- Damages
The above items cannot be taken away and liquidated to pay off creditors. Because of this, it is known as “exempt” property.
Non-Exempt Property
Non-exempt property includes all items that may be taken and sold by the trustee in a bankruptcy case. The money earned from the liquidation of this non-exempt property is then used to pay off creditors. The following items are usually considered to fall under the category of non-exempt property:
- Expensive, unnecessary musical instruments
- Family heirlooms
- Second vehicles
- Second homes
- Valuable collections
- Cash, bank accounts, and investments
If you are filing Chapter 7 bankruptcy, you should expect to see the above items taken away and sold, if you have them.
Contact Us
If you would like to learn more about liquidation bankruptcy and what constitutes exempt and non-exempt property, call the Austin bankruptcy lawyers of Slater, Kennon & Jameson, LLP today at 512-338-1100 to schedule a consultation with one of our qualified attorneys.