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Will I lose everything if I file for Chapter 7 bankruptcy?

 Posted on November 03, 2020 in Bankruptcy

People in Geneva facing financial difficulties in these uncertain times may wonder if filing for bankruptcy is right for them. One fear they may have regarding bankruptcy, though is that they will lose everything in the process and be destitute. However, this fear is unfounded as there are a variety of exemptions that allow people filing for Chapter 7 bankruptcy to keep certain assets so they can move forward on solid financial footing.

What are some unlimited Chapter 7 bankruptcy exemptions?

In a Chapter 7 bankruptcy, your assets will be sold, and the proceeds used to pay you're your creditors. This is why it is referred to as “liquidation bankruptcy.” However, when you file for Chapter 7 bankruptcy, you are allowed to keep any property that is “exempt” under state or federal law. Some examples of exempt assets in which a person can keep no matter what the value of the asset include:

  • Family photographs
  • Necessary clothing
  • Qualified retirement plans
  • IRAs
  • Life insurance policies

What are some limited Chapter 7 bankruptcy exemptions?

Chapter 7 bankruptcy also allows for some assets to be exempt up to a fixed dollar amount. Some examples of this include:

  • Your home (equity of $30,00 for spouses filing for bankruptcy jointly)
  • Your car (equity of $2,400 for each individual owner)
  • Tools or books used in your job ($1,500)

Illinois also provides those filing for Chapter 7 bankruptcy with an exemption for up to $4,000 in equity for any other personal asset, including funds in a bank account or cash.

Seek assistance with your Chapter 7 bankruptcy filing

It may come as a relief to learn that just because you file for bankruptcy, you will not lose everything. However, it is important to note that this post is for informational purposes only and does not contain legal advice, nor can it promise any specific outcome in a bankruptcy filing. To take full advantage of all exemptions, many in the Geneva area who file for Chapter 7 bankruptcy choose to work with a bankruptcy attorney.

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