Roughly 80 percent of consumers who declare bankruptcy pursue chapter 7. Often called liquidation bankruptcy, this approach requires debtors to surrender nonexempt assets to the trustee, who then sells them and uses the proceeds to pay back lenders.
That doesn’t mean, however, that you’ll lose everything you’ve ever worked for if you file for chapter 7. When it comes to personal property, Mississippi allows for all kinds of exemptions, and most—if not all—of your assets may fall under the exempt category.
Let’s take a look at what’s typically exempt—and what’s not—so you have some idea of how the proceedings could affect your lifestyle:
Generally speaking, exempt assets include the essentials you need to lead a normal—though not extravagant—life. Examples are:
- Certain retirement benefits;
- Certain survivor’s benefits;
- Certain death and disability benefits;
- 75 percent of earned but unpaid wages (or 30 times the federal minimum hourly wage);
- Up to $75,000 of equity in your primary residence, with exceptions;
- Up to $10,000 in personal property, like furniture and appliances;
- Up to $10,000 in personal injury awards;
- Your daily driver, assuming it’s not a luxury vehicle; and
- Your professional tools.
Because these assets are typically exempt, you should be able to retain them during the chapter 7 proceedings. What’s more, you may double the exemption amount (excluding the homestead exemption) if you happen to be married and you declare joint bankruptcy with your spouse.
Nonexempt assets are those that can be liquidated to pay back creditors. In other words, you may not be able to retain them during the bankruptcy proceedings. Examples include:
- Real property other than your homestead, like vacation homes;
- A second vehicle that’s not your daily driver;
- Family heirlooms;
- Valuable collections;
- Musical instruments, unless you are a professional musician; and
- Stocks, bonds, and other investments.
How Can I Protect My Property During the Bankruptcy Proceedings?
Since every petitioner’s situation is unique, there’s no foolproof way to retain property during the chapter 7 proceedings. The easiest way to determine what kinds of strategies are available to you is by consulting a seasoned bankruptcy attorney.
A knowledgeable professional will review your circumstances, including all assets and liabilities, to identify precisely what’s at stake. A lawyer will also determine whether you’re even eligible for chapter 7 based on your earnings.
If it turns out your income exceeds the qualification limits, chapter 13 may be a viable option. Also known as reorganization bankruptcy, chapter 13 allows debtors to catch up financially by implementing a three- to five-year repayment plan with a single monthly payment, rather than liquidating assets.
Call 601-487-8448 for a Free Consultation with a Jackson Bankruptcy Attorney
To find out if you’re a good candidate for chapter 7, turn to Brown Bass & Jeter, PLLC. We’ll answer your questions, evaluate your situation, and help you determine how best to regain your financial footing. Call 601-487-8448 or use our Online Contact Form to set up a free consultation with a bankruptcy lawyer in Jackson.