What Property Can You Keep When Filing For Chapter 7 Bankruptcy?

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If you are thinking about filing for Chapter 7 bankruptcy, you are probably wondering how much of your personal property you will be allowed to keep once you file. Can you keep that signed painting, your coin collection, even your furniture — the thought of losing all of your prized possessions can be a very scary thought indeed. The answer to your question largely depends on the types of property you have, how much it is worth, and the bankruptcy exemptions you use.

What is the Purpose of Exemptions in Chapter 7 Bankruptcy?

After you file Chapter 7, the court appoints a bankruptcy trustee who is given the authority to sell your assets to pay your creditors. Luckily, filing BK does not mean you have to turn over every item you own, exemptions allow you to keep a certain amount of your personal property and the trustee can not sell these items to pay off your creditors. How much you can keep and what you can keep depends on the value of the asset and the specific exemptions in your state or the federal bankruptcy code. Thanks to these exemptions, you will probably be able to keep the majority of your personal property.

How Do Exemptions Work in Chapter 7 Bankruptcy?

Each state and the federal system have a set of exemptions — some states require you to use their exemptions while others let you choose between your state system or use the federal exemptions. Therefore, the amount of property you can protect depends entirely on the state you live in. The following states let you chose between using the state list of exemptions or using the federal bankruptcy exemptions. Obviously, you want to choose which system benefits you the most. If you live in a state that is not listed below, you have no choice but to use the state list of exemptions.


Alaska New Jersey
Arkansas New Mexico
Connecticut New York
District of Columbia Oregon
Hawaii Pennsylvania
Kentucky Rhode Island
Massachusetts Texas
Michigan Vermont
Minnesota Washington
New Hampshire Wisconsin

Now that you have decided which exemption system you are going to use (either the state or the federal), you will then need to fill out a Schedule C — Property Claimed as Exempt — along with your other bankruptcy paperwork. On this form, you list all of the property and assets that are legally exempt.

Federal Bankruptcy Exempt Property

Since each state has their own exemption list, we will just go over the federal exemption list. If you have to use your state’s list, we suggest you look up the bankruptcy code for your state on the Internet to see what property you can list on your Schedule C. The following are the most important federal exemptions and the amount you can take. These amounts are adjusted for inflation every three years and the recent adjustment was made April 1, 2016.

  • Homestead — Real property, including mobile homes and co-ops, or burial plots up to $23,675. Unused portion of homestead, up to $11,850 may be used for other property.
  • Automobile — up to $3,775. The equity in your car is based on the car’s market value, less any loans against it.
  • Household items (appliances, furniture, clothes, books, crops, or musical instruments) — up to $12,625 aggregate value and $600 per individual item.
  • Jewelry — up to $1,600 in value.
  • Tools of the trade — up to $2,375 in value.
  • Health aids
  • Life insurance policies that have not matured except credit life insurance.
  • Up to $12,625 in loan value of life insurance policy.
  • Alimony and child support — amount reasonably necessary for support of debtor and dependents.
  • Public benefits — such as unemployment, workers compensation, public assistance, Social Security or Veteran’s benefits.
  • Retirement accounts are exempt, however, there is a cap of $1,283,025 on IRSs and Roth IRAs.

Federal Non-Exempt Personal Property

As we stated before, when you file for bankruptcy, there is certain property that must be turned over to the bankruptcy trustee to be sold to pay off creditors. Below are examples of property a debtor will usually have to give up in order to be liquidated with the proceeds being dispersed to your creditors:

  • Expensive musical instruments, unless you are a professional musician.
  • Collections of coins, stamps, family heirlooms, and other collectable valuable items.
  • Cash, bank accounts, stocks, bonds, and other investments.
  • A second car or truck.
  • A second or vacation home.

If you have any questions about what property you can keep and what you cannot keep, the best advice we can give you is to seek the help of an experienced bankruptcy attorney.

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