For many people unable to pay their bills, bankruptcy is the only reasonable option to restore some kind of financial stability. Most people worry about the possessions they will lose in the process. When you file bankruptcy, what can you keep?
The answer is more than you think, depending on the type of bankruptcy you file. In a Chapter 13 action, your debt is reorganized and reduced to allow you to pay off expenses over a three- to five-year period. If you work through your plan, you keep all your property.
If you qualify for a Chapter 7 bankruptcy, the bankruptcy trustee evaluate your petition for property that is not exempt under federal bankruptcy law. Exempt assets are those possessions and goods that state or federal law allows you to keep, even during a Chapter 7 bankruptcy.
In New York you can elect to take bankruptcy exemptions provided by the state or those detailed under federal law, but not both. The types of possessions that are exempt, up to a certain value, under state or federal bankruptcy law include:
- Equity in your homestead or residence
- Value in a motor vehicle based on current market value
- Household goods including furnishings, clothes and other items
- Tools needed for your trade or business
- Jewelry
While many people fear losing their shirt in a bankruptcy, it is only a figure of speech. Even in a Chapter 7 bankruptcy, you will likely be able to keep possessions most precious to you, but the facts of each case are different.
If you are considering bankruptcy, we help you set aside your fears, understand the facts and navigate options to obtain a fresh financial start.