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What property will you lose if you file for Chapter 7 bankruptcy?

There are many reasons why Florida readers may be hesitant to file for bankruptcy. They may feel embarrassed, unsure of what will happen or what this could mean for their personal property. People often assume that filing for bankruptcy, particularly Chapter 7, means that they will lose their assets. 

Chapter 7 is liquidation bankruptcy, which means a person may lose some stuff in order to pay off debts. Before you let this thought scare you off, you may find it beneficial to know that there are exemptions available. This means that you may not have to give up some of the property that is most important to you while still effectively dealing with certain types of debt that are weighing you down.

How does it work?

The intent of bankruptcy is not to leave a person destitute or without things he or she needs for daily life. The purpose of this process is to provide a consumer with protection against debt collection efforts and provide an organized and effective way of discharging certain types of debt. Chances are that you will be able to keep many of the things that are important to you, even when filing for Chapter 7 bankruptcy. Exemptions may be available for the following items: 

  • Things you need for work, including your tools of the trade
  • Vehicles worth under a certain amount of money
  • Necessary furniture, appliances and household goods
  • Reasonably necessary clothing
  • Pensions
  • A portion of money you've already earned but have not yet received
  • Damages won from a personal injury claim
  • Jewelry worth up to a certain value

While you will be able to retain many of your assets, there are limits to the exemptions available to you. Some things you may not be able to keep include the following: 

  • Second homes or extra vehicles
  • Valuable collections and collectible items
  • Cash and money in certain types of bank accounts
  • Investments, stocks and bonds
  • Expensive musical instruments unless you are a musician by profession
  • Family heirlooms

Chapter 7 is a popular choice for bankruptcy because it only takes a few months to complete. Though you may think this is the right option for you, you will find it beneficial to learn more about the options available to you and eligibility requirements for Chapter 7 before moving forward. You may also want to learn more about potential exemptions that could be available to you.

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