Ask A Lawyer: How Do Exemptions Help Me In A Chapter 7 Case?

Denvil Crowe's picture

Do you have a question about bankruptcy? Bankruptcy is a complicated process and requires the assistance of someone with the background and experience to answer all of your questions. Denvil Crowe is one such individual. One of the most common questions posed by clients and prospective bankruptcy debtors is "What do I get to keep when I file bankruptcy?"

The answer that determines what a bankruptcy debtor may keep is "Exemptions," which are chosen by the legislature of the state where the bankruptcy case is filed. In most, if not all, cases for my clients, this is Mississippi. Exemptions are important in both Chapter 7 and Chapter 13 bankruptcy cases: In a Chapter 7 bankruptcy case, as mentioned above, exemptions determine how much property a debtor may keep; In a Chapter 13 bankruptcy case, exemptions may assist in lowering Chapter 13 plan payments.

When a bankruptcy case is filed, most of a debtor's property and assets become the property of the debtor's "bankruptcy estate." The property in this "estate" is used to pay unsecured creditors. Exemptions typically cover basic necessary items. For example, in Mississippi, there is an exemption for a portion ($75,000) of the value in a home, agreeably, the most important, necessary, and vital asset owned by an individual. In contrast, there is no exemption in Mississippi, or any other state for that matter, for luxury items such as jet skis, boats, or an expensive watch or doll collection.

It's easy to understand why every potential bankruptcy debtor wants to know what property he or she can keep when filing a bankruptcy case. And exemptions are just that - ways to exempt or exclude property from the bankruptcy estate. Therefore, this property is not considered when establishing the liquidation value of your property and, therefore, the amount you must pay over to creditors. In a Chapter 7 bankruptcy, technically a liquidation under federal law, the bankruptcy trustee may not liquidate or sell exempt assets to pay unsecured creditors.

Bankruptcy is a process and not a simple act. If your financial situation requires the filing of a bankruptcy case under Chapter 7 or 13, an experienced and qualified bankruptcy attorney can help you accurately review and carefully consider your options. An experienced and qualified bankruptcy attorney can help you throughout the entire lifespan of a bankruptcy case. Call 800-429-HELP (4357), email us at Contact@denvilcrowe.com or check us out online today!

 

 

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