Losing Property in a Chapter 7 Bankruptcy

August 1, 2019 | By Steffens Law Office
Losing Property in a Chapter 7 Bankruptcy

Chapter 7 bankruptcy, the most common type of bankruptcy filed in the state of Nebraska, is sometimes called a liquidation bankruptcy. A trustee collects property and sells the assets to pay the creditors. However, this does not mean you will lose all your assets if you file a Chapter 7 case.

Certain property is exempt and may not be taken by creditors unless it is encumbered by a valid mortgage or lien.  A person is usually allowed to retain his or her unencumbered exempt property in a Chapter 7 case.  A person may also be allowed to retain certain encumbered exempt property.  Encumbered property is property against which a creditor has a valid lien, mortgage or other security interest.

Examples of property you will be allowed to keep include:

  • A home falling below a specified level of equity
  • Vehicles falling below a specified level of equity 
  • Essential household furnishings 
  • Clothing and personal effects
  • Necessary tools of the trade
  • Pensions or retirement benefits
  • Unemployment, workers' compensation, and other government benefits

The value of exemptions doubles when a married couple files jointly for a Chapter 7 bankruptcy.

Typically, debtors are able to keep most, if not all, of their property and still receive full bankruptcy protection.

Contact Us Today

At Steffens Law Office, we believe a Chapter 7 bankruptcy can give you a fresh financial start after suffering setbacks due to illness, job loss, or unplanned expenses. Contact us today to schedule a free, no-obligation case review.