In a Chapter 7 bankruptcy, the debtor's property is classified as either exempt or nonexempt. The classification of property determines if it can be liquidated to pay debts.
Exempt property includes household furnishings, clothing, personal effects, tools of the trade, and certain other goods up to a specific dollar value. Equity in a home or vehicle can also be exempt, as long as it's under the current threshold.
Exemptions double when a married couple files for bankruptcy together.
What Happens When There Is No Nonexempt Property?
If, from the bankruptcy forms filed, it appears that the person filing has no nonexempt property, a notice will be sent to the creditors advising them that there appears to be no assets from which to pay creditors. This means that it is unnecessary for them to file claims. However, if assets are later discovered, they will then be given an opportunity to file claims. This type of case is referred to as a no-asset case.
Most Chapter 7 cases that are filed by consumers are no-asset cases. This means that the individuals only own property deemed essential, such as a modestly valued home and vehicle. In these cases, the individuals have often been experiencing financial trouble for a long period of time and have already sold their non-essential valuables to pay debts.
How Can Steffens Law Office Help?
At Steffens Law Office, we can explain the role of exemptions in a Chapter 7 bankruptcy and help you determine how to increase the amount of property you are allowed to keep. Call today to schedule a free, no-obligation case review.