What is a Chapter 7 Bankruptcy Exemption?

By Pat Geddie | Leave a Comment

One of the tradeoffs for a Chapter 7 bankruptcy is that you must surrender property, which goes to pay off your creditors. However, not all of your property is used to satisfy debts. There are some classes of assets and property that you can keep if they fall into one of the exemptions from a Chapter 7 bankruptcy.

You May Keep Your House but Not Other Assets

The good news is that some of the property in your day-to-day life falls within the exemption. For example, your home is usually within the Chapter 7 exemption, assuming that you did not purchase it within a certain amount of time before filing for bankruptcy. Florida allows for a very generous homestead exemption that is based on the size of the property as opposed to property value. However, you should be prepared to surrender your car in bankruptcy since you can only keep up to $1,000 in equity.

In addition, many of your retirement accounts are also exempted from bankruptcy. However, the exemption would only cover $1,000 of your personal property. There are also exemptions that cover some types of life insurance policies.

Florida’s exemptions are far more limited than those in other states. If you choose to file a Chapter 7 bankruptcy, you will need to surrender many types of assets. However, you would get a large amount of debt relief, with your debts largely being erased. This is different from Chapter 13, where you enter into a repayment plan over time.

Call a Melbourne Bankruptcy Law Attorney

The type of bankruptcy that you elect to file is a big decision. The Harnage Law Firm can help you make decisions about the bankruptcy process. Contact us online or call us at 321.549.7886 to discuss your bankruptcy case.