What assets are exempt in a Chapter 7 bankruptcy filing?

Filing for bankruptcy is often viewed as a scary and negative situation. There’s a common misconception that you’ll lose all your Louisiana property if you file. However, certain assets are exempt from a Chapter 7 bankruptcy filing.

Your home

States sometimes have variations in their bankruptcy laws, but one thing that remains is that your home is protected if you file for Chapter 7 bankruptcy. If you don’t have equity in your home or have very little, it should be exempt. This applies to your primary residence if you have a summer or vacation home. You must be up to date on your mortgage payments.

Your vehicle

If you paid off your vehicle in full, you can keep it after filing for Chapter 7 bankruptcy. However, if you’re leasing your car, you may still be able to keep it in spite of bankruptcy by continuing to pay it off each month. In some cases, you may even be able to pay off the vehicle in full.

If you are still paying off a car loan, you may get the chance to reaffirm it, which means you will have to continue making regular payments.

Your household and personal items

Your furniture, appliances and everyday personal items like clothing are protected from bankruptcy. The only exception is if you own anything that’s overly extravagant such as designer clothing or pricey jewelry, which could be evaluated by the bankruptcy trustee and possibly sold so the proceeds could go to pay your creditors.

Your wages, benefits and retirement account

Any wages you earned prior to filing a Chapter 7 petition that won’t be paid until after your case is filed are exempt. Benefits and retirement accounts are also protected provided they’re listed on your bankruptcy paperwork. Benefits include things like unemployment, Social Security and disability.

Knowing you can keep these important assets during bankruptcy could give you some peace of mind.