Legally reviewed by Allen A. Kolber, Esq. - The Law Offices of Allen A. Kolber, Esq., P.C.
One of the biggest fears holding you back from declaring bankruptcy is the possibility of losing everything you own. However, unfortunately, you may already be on that track if your creditors are coming after your collateral/pursuing lawsuits against you, or if you have been having to sacrifice things to make ends meet. Well, in reality, bankruptcy includes protections, otherwise known as exemptions, that may allow you to keep certain property. However, before you dive right in, you must understand that you may possess non-exempt assets, as well. With all that being said, please follow along to find out the exempt and non-exempt assets and how a proficient Rockland County Chapter 7 bankruptcy attorney at The Law Offices of Allen A. Kolber, Esq., P.C., can help you better understand what you are protecting versus what you may be putting at risk with your filing.
What does exempt and non-exempt mean in Chapter 7 bankruptcy?
Simply put, exempt property refers to assets that the United States Bankruptcy Code protects from being taken by your appointed bankruptcy trustee and sold during your Chapter 7 case proceedings. Common examples of such property may include your personal property, retirement accounts, and public benefits. With that, you may be able to keep your house if it has little to no equity, and your vehicle if you own it outright or are current on your loan payments.
Essentially, bankruptcy exemptions exist so that you may maintain stability and basic living needs during your bankruptcy process. So, in contrast, non-exempt property is the assets that your trustee has the legal authority to liquidate and use the proceeds to repay your outstanding creditors. This may entail non-essential luxury items (i.e., jewelry, artwork, and collectibles), second homes (i.e., vacation and investment properties), etc.
Should I use federal or state exemptions for my Chapter 7 bankruptcy case?
Importantly, for your Chapter 7 bankruptcy case, you can choose between New York State exemptions and the federal bankruptcy exemptions, and you cannot mix and match between the two systems. This choice matters as it may heavily affect which property you get to keep versus surrender. Generally speaking, it may be better to select the state exemption system if you have significant home equity, as this may have a more favorable homestead exemption.
Otherwise, if you have a lot of personal property or variable assets, federal exemptions may be preferable. For example, you may keep up to $5,025 in equity for your motor vehicle with the federal exemption versus $4,825 in equity with the state exemption. Plus, the wildcard exemption for any property not covered elsewhere is $1,675 versus $1,175, respectively. But the state’s system may allow for better coverage with tools of the trade and household goods, so again, it largely depends on what you own and wish to continue possessing.
To conclude, please prioritize scheduling an initial consultation with a talented Rockland County bankruptcy attorney from The Law Offices of Allen A. Kolber, Esq., P.C. We would be honored to represent you in your legal case.
