Filing for chapter 7 buys you time to figure out what to do about protecting your assets by using the chapter 7 bankruptcy exemptions code. Due to the automatic stay, your creditors have to stop their efforts to collect from you and all repossession attempts must stop as well. Filing bankruptcy is a fairly complicated process, but knowing what exempt property and assets you can keep and how to use these exemptions makes it a much more complex task. This article will aim to give you a brief general idea of what you may expect.
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When you file for chapter 7, all your personal and real property become part of the bankruptcy estate, which means that your assets can be sold to satisfy your debts, unless they are classified as "exempt". Your property is deemed exempt or non-exempt only after the trustee files the property exemption report. This report determines whether you will keep your property or not.
Federal and state exemptions vary widely and depending on the state you reside, you can use either federal or state exemptions, although some states do not offer the option of federal exemptions since they have replaced them with their own.
Exemption laws also differ widely from one state to another. In some states a consumer's home is protected for its entire value, but in others you are only protected for up to $7,000 of your home's value. The same applies to your vehicles.
So the chapter 7 bankruptcy exemptions you are allowed to take, depends in large part on how long you have lived in the state in which you reside.
Additionally, due to a 2005 new bankruptcy legislation, you must have lived for at least two years in a location to use that state's exemptions, however if you have lived there for at least three months, you may use the federal exemptions if your residency location allows you.
As you can see, this is a confusing procedure and it would not be in your best interest to handle the process yourself. A good bankruptcy attorney can advise you about chapter 7 bankruptcy exemptions, as well as what type of bankruptcy is appropriate for your particular situation. Furthermore, most people file for chapter 13 since very few quality for chapter 7.
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