How Much in Assets Can You Have When Filing Bankruptcy?
One important consideration for anyone thinking about filing personal bankruptcy is the degree of asset protection offered by the bankruptcy court. After all, depending on your assets and possessions, bankruptcy may be just one choice to improve your finances.
If you'd like to speak with a bankruptcy lawyer about how much in assets you can have filing bankruptcy, please fill out this form. Arrange a free, no-obligation consultation with a bankruptcy lawyer near you today.
What Are the Asset Limits in Bankruptcy?
So how are assets treated when filing for bankruptcy? The answer depends on two major factors: the type of bankruptcy protection you seek and where in the state in which you live.
- Chapter 13 bankruptcy: Chapter 13 bankruptcy works by letting filers catch up on past-due debts with the help of a three- to five-year repayment plan. Sticking to the repayment plan is essential to maintaining the protection of the bankruptcy court, so in order to be eligible for Chapter 13 bankruptcy, you need to have a steady, reliable source of income. Because of the way it works, Chapter 13 is often the preferred type of bankruptcy for filers with significant assets, because they typically get to keep all of them.
- Chapter 7 bankruptcy: This type of bankruptcy works by offering filers a full discharge of some or all of their unsecured debts, like credit card debts and personal loans. In other words, Chapter 7 filers can often have certain debts completely wiped clear from their records. Because this debt relief is so sweeping, though, Chapter 7 has strict rules: filers are only allowed to keep certain very specific assets when they file their cases and will have to meet certain criteria in order to be eligible to file. If a filer has any assets that are not protected by state exemptions, those assets can be sold to raise money to repay creditors.
What Sorts of Assets May Be Protected in Chapter 7 Bankruptcy?
The dollar limit on these protections varies from state to state, but most states offer exemptions of some amount for the following:
- A house: The partial or full value of a primary home or land, or home equity, exempted in Chapter 7 will depend on where you live and may depend on your age, whether you have children living at home, your ability level and whether or not you own the home jointly with a spouse.
- A car: Most states protect a car up to a certain value. If your car exceeds this value, you'll likely have a chance to renew your loan, pay off the remainder of your loan, or surrender the car to your creditor.
- Work tools: For the obvious reason that people need certain tools to make a living and thus get back on their feet financially, most states exempt necessary work or trade tools in a generous amount.
- Clothing and personal possessions: Necessities for day-to-day life like cookware, clothing, books and similar possessions are exempted to some degree in most states. Some states even offer "wildcard" exemptions that can be applied to any category.
- Jewelry: In many places, wedding or engagement rings are exempted, along with jewelry up to a certain dollar amount (either individually or collectively).
Ask a Lawyer about Asset Limits Where You Live
If you'd like to know whether your assets make you a good candidate for a Chapter 7 or Chapter 13 bankruptcy case, it's time to connect with a bankruptcy lawyer practicing near you. Simply fill out the case review form below to get started now.