What Property Can You Keep Following A Bankruptcy Filing?

An understandable concern regarding bankruptcy involves what property you can and cannot keep. However, such concerns often prevent individuals from taking the proper steps to eliminate debt. It is therefore important to speak to an experienced bankruptcy lawyer who understands your bankruptcy options and who will pay close attention to your specific circumstances.

The attorneys at Purrazzella & Purrazzella, P.A., have been providing a wide range of bankruptcy and debt relief services for New Jersey clients for well over 30 years. We will speak to you in depth about your personal situation, provide you with an understanding of the bankruptcy process and help you make the right choices.

Property Exemptions Under Chapter 7 Bankruptcy

It is important to understand that Chapter 7 bankruptcy and Chapter 13 bankruptcy operate very differently when it comes to property and property exemptions. Understanding these distinctions is an important factor in deciding which bankruptcy chapter to file.

Under the Chapter 7 bankruptcy process, courts liquidate nonexempt property to pay your creditors. However, in many Chapter 7 cases, there is no liquidation process because of exempted property under the Bankruptcy Code. The most important exemption, of course, concerns your home. The Bankruptcy Code under Chapter 7 allows for you to stay in your home as long as you keep current on your payments. It even allows for you to hold onto a portion of equity in your home.

Under Chapter 7, the exemptions allowable regarding personal property includes:

  • Your car or motor vehicle up to a certain value
  • Necessary household goods and furniture
  • Certain appliances
  • Necessary clothing
  • A certain amount of jewelry
  • Pensions
  • Unpaid portions of earned wages
  • Public benefits
  • Tools of your trade
  • Personal injury damages

These exemptions do not apply to second vehicles or second homes. If you have questions regarding exempt property, it is important to speak to a bankruptcy attorney to help you determine exactly what this could mean for you.

How Chapter 13 Bankruptcy Differs

Chapter 13 bankruptcy involves a payment plan in which you repay debts over a three- to five-year period. Under the Bankruptcy Code, creditors are to receive in a Chapter 13 payment plan what they would otherwise have received if you were filing Chapter 7. Therefore, you must pay a certain amount under the Chapter 13 plan to provide that nonexempt amount to your unsecured creditors. As this is an extremely complex process, assistance from an experienced bankruptcy attorney is invaluable.

Helping You Make The Right Decisions

For all of your bankruptcy questions, please set up an appointment to speak to an attorney at Purrazzella & Purrazzella, P.A., by calling 732-691-4589. Located in Toms River, we represent individuals in Ocean County, Monmouth County and across New Jersey.

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.