If you're considering Chapter 7 bankruptcy, you're probably seeing flashes of old movie scenes where a formerly successful person goes bankrupt. Hollywood usually depicts these scenes with images of movers coming into the house and taking away all of the person's possessions. Usually, they're just left with the clothes on their back.
This is not how Chapter 7 bankruptcy actually is. Yes, you might need to let go of some of your possessions, but for the average Chapter 7 filer, they get to keep the majority of their possessions. At the very least, they will keep the non-luxury properties they actually need. It's all because of bankruptcy exemptions and the fact that much of your property will receive protection from liquidation in Chapter 7 proceedings.
What are the most common bankruptcy exemptions?
There are four bankruptcy exemptions that will apply to many Ohio residents' situations when they file for Chapter 7. Do you think you could benefit from one of these exemptions?
- Homestead exemptions: This protects your home from liquidation. There are limits to the value of a home that receives protection, but you will likely benefit from at least partial exemption relating to the value of your residence and/or the equity that you have invested in it.
- Vehicle exemptions: Many Chapter 7 filers can protect their cars from liquidation. Again, there are valuation limits, so if you have an expensive luxury car, you may not be able to benefit, but all-in-all, Chapter 7 proceedings are not meant to strip you of your ability to drive to work. Multiple or extra cars, on the other hand, might not be protected unless they are necessary for your business.
- Personal property exemptions: A lot of your personal property, like clothing, appliances, furniture, jewelry, family heirlooms and other items may be exempt up to certain limitations. These limitations could apply per item and also to the total amount that receives protection.
- Wildcard exemptions: Here we have a miscellaneous category that applies to whatever items that you can practically argue deserve exemptions.
Do you want to know what exemptions you qualify for?
It's a great idea to evaluate what property will be exempt before your file for Chapter 7 bankruptcy. This will help you evaluate whether Chapter 7 is right for your needs and situation.