Bankruptcy: Property you can Keep

December 8, 2011 by The ME Law Firm

Each situation is unique in a bankruptcy, but I am going to explain a few general rules. Always consult with an attorney at Myers & Eichelberger before filing a bankruptcy.

What property you can keep is a common question we are asked. In a Chapter 7 bankruptcy, certain property is considered exempt from creditors.  Each state is different and some states allow you to take a state exemption or a federal exemption. I am going to stick to the federal exemptions. Keep in mind, these can change but this should be a general idea of exemptions.

$18,450 equity in your home

$475 per item in household goods (up to $9,850)

$2,950 equity in your car

$1,850 things you need for your job

$975 in any property, up to $9,250

In addition, there are exemptions for social security, unemployment payments, veteran benefits, pensions, public welfare, regardless of the amount.

Exemption amounts are normally doubled if a person files jointly with their spouse.  The property is then valued at today’s market value, not at the price you want it to be or the price you paid for the item.  People sometimes over value their possessions, but a trustee will determine the value with a little wiggle room.  Exemptions will protect your equity, but it will not protect the holder of a mortgage from reclaiming the property. In a Chapter 13, you do get to keep your property if your plan meets the requirements set forth.

As for your home, normally a person will not lose their home and/or their car as long as the equity is exempt.  If not exempt, normally you will be required to pay the difference and keep the property (if so desired).  If there is a security interest in the property, it does not vanish in the bankruptcy; they still have a right to collect the debt if you do not make the payments after the bankruptcy. There may be other ways to challenge the debt and if there is any fraud or duress involved, you should speak to an attorney at Myers & Eichelberger.


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