Chapter 7 bankruptcy is a liquidation bankruptcy process. There are different Chapter 7 bankruptcy exemptions that can protect some of the filing party’s property from the process of selling property to repay creditors. Those interested in Chapter 7 bankruptcy protection should be familiar with what the Chapter 7 bankruptcy exemptions are.
Chapter 7 bankruptcy exemptions
There are several categories of Chapter 7 bankruptcy exemptions including:
- Homestead exemption – the homestead exemption allows the filing party to protect equity in their home. A consumer filing for Chapter 7 bankruptcy protection can exempt up to $15,000 in equity in their home from the bankruptcy process. The amount of equity they can protect goes up if the filing party is a married couple filing for bankruptcy jointly.
- Wage exemption – filing parties can exempt a certain percentage of their wages.
- Vehicle exemption – filing parties can exempt up to $2,400 of the value of their vehicle.
- Tools of the trade exemption – filing parties can exempt up to $1,500 worth of implements necessary for the filing party to perform their trade.
- Personal property exemption – filing parties can exempt certain personal property such as necessary clothing, family pictures, prescribed home health aids, certain books and several other categories of items.
- Wild card exemption – the wild card exemption can be used to protect up to $4,000 in property that would not otherwise be exempt.
Other bankruptcy exemption categories include pension and retirement exemptions, government benefits exemptions, insurance exemptions and some others. Bankruptcy property exemptions are an important protection that is built into the Chapter 7 bankruptcy protection process. For that reason, filing parties should be familiar with the different types of property exemptions they may be able to claim.