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Will my property be exempt under Chapter 7 bankruptcy?

Filing for bankruptcy in Florida can present many potential concerns and questions for a Florida resident. Bankruptcy can provide welcome relief from what may seem to be overwhelming debts and creditors, but debtors may wonder what they will lose in the process. It is true that in filing for Chapter 7 bankruptcy, a debtor will have to relinquish certain property to an appointed bankruptcy trustee. But, it is important to note that a debtor does not have to relinquish all property, as some property will be exempt.

Exempt property is that which a debtor is allowed to keep after going through a bankruptcy. Property which is not exempt from the bankruptcy estate is known as non-exempt property.

Exempt property often covers the basic essentials that a person needs to survive and bounce back after a bankruptcy filing. For example, a motor vehicle may be exempt property, as a Florida resident likely will need transportation to get to and from work and transport his or her family. Reasonably necessary clothing, and even jewelry up to a certain value, as well as household furnishings and goods, may be exempt property. Tools that a debtor uses in his or her profession may be exempt to allow a debtor to continue to work and earn a living.

Property that may not be exempt may include a second automobile or second home. Expensive musical instruments, and even family heirlooms, may not constitute exempt property. Bankruptcy courts are often interested in obtaining cash, stocks and investments to satisfy a debtor's creditors, and, therefore, these assets are not exempt.

Bankruptcy may mean the liquidation of a number of a person's assets, but it does not have to mean full asset liquidation. Discussion with a bankruptcy attorney can help a person identify what property may be exempt or not, and help ease any concerns a Floridian might have about particular assets.

Source: FindLaw, "Exempt vs. Non-exempt Property Under Chapter 7", accessed Sept. 25, 2015

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