There are many reasons why you may feel hesitation regarding bankruptcy protection. Filing for Chapter 7 bankruptcy can be a daunting decision, even if you are struggling with overwhelming debt. One of the reasons you may be reluctant to move forward with this step is because you have concerns over what will happen to your personal property. You may be wondering if filing for bankruptcy will result in the loss of your possessions.
Chapter 7 bankruptcy is liquidation bankruptcy, which means you may not be able to keep every single item you own. However, bankruptcy laws provide exemptions for certain assets, allowing you to keep the things most important for your daily life. Don’t let misconceptions about your property keep you from taking a step that could be critical for your future.
Possible exemptions to asset liquidation
The intent of bankruptcy is not to leave you penniless and without your property. It is an organized process that allows you to address your debt in an organized and effective manner. This is why the law allows exemptions for Chapter 7 bankruptcy, providing applicants a way to retain many of the things important to them, such as:
- Tools of the trade and things necessary for work
- Necessary household goods, furnishings and appliances
- Necessary clothing and jewelry worth up to a certain amount
- Pensions and a portion of the equity you have in your home
- Some unpaid but earned wages
- Damages awarded in a personal injury claim and public benefits
While you will likely get to retain many of the things you need for work and life, it is likely you will lose some assets. Non-exempt assets may include:
- Expensive musical instruments, unless they are necessary for your job
- Family heirlooms and valuable collections
- Second homes, second vehicles and vacation properties
Proceeds from liquidated property will go toward the repayment of debt. In Chapter 7 bankruptcy, remaining balances may be eligible for discharge upon completion of the bankruptcy process.
Understanding Chapter 7
It is not easy for a Missouri consumer to make the decision to file for bankruptcy. If you are unsure if Chapter 7 is right for you or what to expect regarding your personal property, it may be helpful for you to seek a thorough understanding of this bankruptcy option before making an important decision that will affect your financial future.