Hiring A Bankruptcy Attorney For Peace Of Mind
How Do Exemptions Work In Chapter 7 Bankruptcy?
Gabriel Freeman
One of the key aspects of maintaining a reasonable standard of living after completing Chapter 7 bankruptcy is the exemption. Exemptions are available for certain assets, but you have to ask the court before they will grant you bankruptcy. Here's a look at what exemptions are available and how you can seek them.
Practical Items
A bankruptcy attorney will primarily focus on assets with practical value. If you own your primary residence outright, for example, a Chapter 7 bankruptcy lawyer can ask the court to exempt it. That means the court won't include it in the efforts to recover money to pay your creditors.
You can request exemptions for virtually anything, although the judge doesn't have to grant them. A Chapter 7 bankruptcy attorney will likely encourage a client to seek exemptions for a practical vehicle to get to and from their job. Likewise, you can ask for an exemption on most clothes, furniture, and dishware.
State Wildcard Exemptions
Some states allow wildcard exemptions up to a specified value. Anything you can fit under that number will be exempt. However, you should ask a Chapter 7 bankruptcy lawyer services provider for an explanation of what your state's rules are.
The Trustee
A judge will typically appoint someone as a trustee, otherwise known as an officer of the court. The trustee has a legal duty to recover as much value for your creditors as possible without violating your rights.
Judges almost always listen to trustees' recommendations regarding exemption requests. Be reasonable with your list of exemptions. For example, a trustee might deem a car too expensive. They can sell the car and give you a portion of the proceeds to buy a more reasonable daily driver. The court will then distribute the difference to your creditors.
Unsellable Items
A trustee has a duty to sell valuable items within the timeframe of the process. Items may be unsellable due to the condition or lack of buyers. Similarly, some items may be too hard to sell in the allotted time. A trustee can leave unsold items with the petitioner.
Secured Debts
Notably, secured debts don't fall within the scope of Chapter 7 bankruptcy. A secured debt is backed by an object a creditor can repossess, such as a car or house. If you can't continue to pay, the creditor will repossess the item as per the terms of the loan contract.
Listing Desired Exemptions
It's critical to list all items you wish the court to exempt from the process. A Chapter 7 bankruptcy attorney services firm will encourage clients to be specific. Whenever possible, try to include serial numbers or other identifying marks in your requests.
Keep these tips in mind as you begin to file for Chapter 7 bankruptcy.
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