Bankruptcy exemptions can make a dramatic difference in your
bankruptcy proceeding whether you are filing Chapter 7 or Chapter 13. While the
result for having an exemption is different for each type of bankruptcy filing,
both help the consumer keep more – either property or money.
Definition
Bankruptcy exemptions keep certain assets away from the
bankruptcy trustee. Some exemptions exist to protect specific property, such as
an automobile. However, other exemptions exist to protect an asset’s entire
value or a portion of the asset’s value. The more exemptions a person can
receive, the better off they usually are. Additionally, consumers do not have
to worry about this asset or its value affecting their bankruptcy case.
Chapter 7 Bankruptcy Exemptions
Chapter 7 bankruptcies take the property that consumers
currently own, sell it off and pay down as much debt as possible. In a Chapter
7 bankruptcy, a bankruptcy trustee has the power to sell assets in a consumer’s
bankruptcy estate.
Chapter 13 Bankruptcy Exemptions
Chapter 13 bankruptcies permit consumers to retain their
property while they reorganize their debts. However, the amount that they are
required to pay each month to creditors is dependent on, in part, the property
that they can exempt. Then, the consumers must pay the value of their nonexempt
assets to unsecured creditors. Having more exemptions allows consumers to
reduce the amount that they have to pay to these creditors.
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