A common concern people contemplating filing Chapter 7 Bankruptcy have is what assets can I keep if I file Chapter 7 Bankruptcy? Will I lose all my assets? Can I keep all my assets? Exactly what will I lose and what can I keep?
In a Chapter 7 Bankruptcy, the focus is on your assets. Your assets are either what we call “exempt” or “non-exempt”. If your assets are non-exempt, you lose them to the Chapter 7 Bankruptcy estate. In other words, as soon as you file a Chapter 7 Bankruptcy, you no longer own the “non-exempt” assets. “Exempt assets”, on the other hand, are assets you do not lose in Chapter 7 Bankruptcy. Exempt assets are assets you get to keep and do with as you chose.
In the vast majority of Chapter 7 Bankruptcy cases filed, debtors do not lose any assets. In other words, their assets are “exempt”. Typically, your home (and the equity in it), vehicle (and the equity in it), clothing, furnishings, pensions, and life insurance are all “exempt” assets. This means that the Chapter 7 trustee may not use these assets to pay back any of your debt.
Suppose you had 100k in credit card debt. Now suppose that all of your assets are “exempt”. This means that 100k will get discharged, tax-free, forever and none of the debt will get paid. Now suppose I said you have 100k in debt and you have 5k in non-exempt assets. That means approximately 5k of your 100k in debt will get paid and 95k in debt will get discharged, tax-free, forever.
When the time is right, or when you are ready, reach out to Minnesota’s LARGEST CHAPTER 7 and 13 BANKRUPTCY WEBSITE at www.kainscott.com. You will be so happy you did!