A key factor that often keeps individuals from filing for bankruptcy is the fact that they do not want to lose everything that they have. They fear that by declaring that they are officially "broke" that the government or creditors will aggressively fight for their every possession. Is this you? Do you currently hold the fear that if you take the step of filing for bankruptcy that you might lose everything that you own, everything that is precious to you? Be encouraged, bankruptcy was established in order to help people get back on their feet, though it is a hard road it is meant to help people recover from debt and start fresh. Under bankruptcy, people are also legally protected from creditor harassment and the constant threats for their repayments. Once the court officially files your bankruptcy case, the creditors must stop contacting you because you are technically taking measures in order to deal with the debt. When filing for bankruptcy, there are various exemptions that protect you from losing that which is valuable and important to you. While this is no guarantee that nothing will be taken from you, it can help you rest assured that there is certain property that is exempt.

In both Chapter 7 and Chapter 13 bankruptcy, exemptions are a crucial aspect of the process and in each chapter they play a different role. First off, Chapter 7 bankruptcy in a nutshell means that is a debt elimination or liquidation. When looking at this category, the exemptions will essentially determine what property you are allowed to keep despite the liquidation of much of your property. Chapter 13 is then considered a debt consolidation plan, and it will move all of your debt into one more reasonable repayment plan as opposed to wiping out the debt altogether. Exemptions during this process will help to keep your payments at a lower price.

A bankruptcy exemption by definition means that when you file for any chapter of bankruptcy, there will be certain property that does not have to be given up. Because of this process, the individual is then able to protect certain assets and property such as a car or engagement/wedding rings. Depending on the chapter you file for, an exemption may protect the entirety of the property you own, or up to a set value. If you can have a certain asset declared as exempt, you will not have to worry about it being taken during any part of the bankruptcy process.

Under Chapter 7 bankruptcy, the liquidation route, a trustee will then be appointed who is responsible for helping your sell your assets in order to pay off the debt back to the creditors to whom it is due. Depending on the state you live in will determine the amount of exemptions (both in price and quantity) that you are able to keep. Under this option you will be able to keep a certain amount of equity in the home you own as well as various personal property under your name including, the money in your bank, a car, and the clothes you own, etc. Household goods and personal items like clothing, etc. are usually always under the exempt category, unless you for some reason own these sorts of goods that are at an extremely high value.

When looking at exemptions under Chapter 13, how much you are required to repay to your creditors actually determines on the amount of property and assets you are able to claim as exempt. It is important to realize that your nonexempt assets will then need to go directly to paying off unsecured debt, such as what you would owe the bank on your credit card. To learn more about exemptions and the bankruptcy process as a whole, contact a local bankruptcy attorney in your area today!