Individual bankruptcies come in many shapes and sizes. Most people know a little about the different kinds of bankruptcies, with Chapter 7 bankruptcy being perhaps the best-known.
In Chapter 7 proceedings, the person filing may have to liquidate or sell some of their property. The liquidation of property can help repay creditors who won’t benefit from a repayment plan like they could in other forms of bankruptcy.
This practice has led to the assumption by some that they will have to get rid of their personal belongings to get a discharge in bankruptcy. Is it true that you can’t keep anything valuable while going through bankruptcy?
Other forms of bankruptcy don’t require liquidation
Chapter 13 is a common form of personal bankruptcy for those with major assets or higher income. People who qualify for Chapter 13 bankruptcy won’t have to liquidate their property. It’s usually only those filing Chapter 7 bankruptcy that have to worry about selling their property.
Even in Chapter 7 bankruptcy, you can keep some of your property
The whole point of bankruptcy is to let you get back in control of your finances, not to push you down even further. In Kentucky, federal bankruptcy exemptions are an option. You could possibly protect as much as $25,150 in equity when you use the federal bankruptcy exemptions.
Looking at the total value of your assets can help you decide which kind of exemptions would work best for you. These issues are some of hte first issues reviewed by a good and conscientious bankruptcy attorney. However, with careful planning, is often possible to protect most, if not all, of your property from liquidation in a Chapter 7 bankruptcy filing. Determining if you qualify and creating an inventory of your property can be some of the first steps toward a discharge of your debts and a less stressful financial situation.