Understanding exemption in Chapter 7 Bankruptcy

| Feb 15, 2021 | chapter 7 | 0 comments

There may be various factors that influence the decisions individuals in Kentucky and elsewhere make when faced with the trials of monetary strain. For instance, those considering bankruptcy as a viable option may have concerns about what might happen to their possessions in the process. While Chapter 7 Bankruptcy may call for the liquidation of assets, certain possessions may be deemed exempt from the process.

Bankruptcy exemption

In many cases, an individual who is filing for Chapter 7 Bankruptcy may have the ability to exempt certain types and amounts of assets. An asset that is deemed exempt is not included in the bankruptcy estate, and as such, one may be able to retain possession thereof throughout the process. However, there is a limit to the amount that can be exempt, and certain assets might not be eligible for exemption.

Examples of assets that may be eligible for exemption could range anywhere from motor vehicles under a certain value to household goods and necessities such as clothing. In some cases, assets such as pension funds and home equity may also be eligible for exemption. However, assets such as collectibles, family heirlooms and secondary vehicles or property might not fall under the list of exemption-eligible items.

Making an informed decision

Knowing how to tell what items may or may not be eligible for exemption in Chapter 7 Bankruptcy can be a complex task. Individuals in Kentucky who wish to seek insight on every aspect of the bankruptcy process could choose to consult with an experienced attorney prior to deciding on a path. An attorney can provide a client with advice on making informed choices about the situation and assist him or her in creating a plan to seek debt relief through the proper channels.