If you file for bankruptcy, what property can you keep?

Making the decision to file for bankruptcy isn't easy. This is a choice that likely comes after months or even years of financial struggle, and you may be worried about losing everything if you make this choice. Thankfully, bankruptcy law provides you a way to deal with certain types of balances once and for all while still keeping the property and assets that are most important to your life. 

Chapter 7 bankruptcy allows financially struggling consumers to get rid of many types of debt and get relief from debt collection processes, such as wage garnishment. This process is known as liquidation bankruptcy, which means that certain assets will have to go toward the repayment of your debt. However, this does not means you'll lose everything.

Exemptions during bankruptcy

The intent of bankruptcy is to provide a New Jersey consumer with a way to deal with his or her debt in an effective manner, not to leave him or her destitute. You will not end up on the street simply because you sought relief from unsecured debt. According to bankruptcy laws, certain types of property are exempt, which means these things are not eligible for liquidation. The types of property and assets you will probably be able to keep include: 

  • Your vehicles worth up to a certain amount of money
  • A certain amount of equity in your home
  • Things reasonably necessary for your home, such as furniture and appliances
  • Things you need for work and tools of the trade
  • Jewelry that is worth up to a certain amount
  • Your pension
  • Unpaid wages already earned
  • Public benefits
  • Money you won in a personal injury settlement 

These things allow you to live your life during the bankruptcy process and to, upon completion, emerge to a better and brighter future. Things that you may not be able to keep during bankruptcy include:

  • Musical instruments worth over a certain amount
  • Valuable collections
  • Second homes or vehicles
  • Cash and certain bank accounts
  • Family heirlooms

It can be intimidating to file for Chapter 7 bankruptcy, especially if you are concerned about what this choice means for your life moving forward. If you would like to learn more about what this process will mean for your future, it can help to speak with an experienced attorney about your individual concerns. Bankruptcy could offer you a way to secure a future that is free from certain types of debt.

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