Chapter 7 bankruptcy allows for a fresh start. It also allows for you to keep a certain amount of property known as exempt property free and clear from creditors and from the long arm of the trustee. In terms of real estate, you can protect up to $15,000 worth of equity. In the case of a joint case, husband and wife, you can protect up to $30,000 worth of equity in a piece of real estate.
In terms of other property, there is a $2400 auto exemption and a $4000 miscellaneous personal property exemption that can be sprinkled over any type of personal property. When you have a joint case, the exemptions are doubled. So when you ask am I going to lose my property whether it be a house or a vehicle or money in a bank account, it really depends on what the equity in that item is. Equity is determined by looking at the market value and subtracting what is owed. If you have a house worth $100,000 and you owe $105,000, then there is no equity and you have no fear. If, on the other hand, the house is worth $100,000 and you owe $50,000, now you have $50,000 worth of equity which will exceed the amount that you can protect even in a joint case.
So it’s very important that you consult with your attorney and you answer questions truthfully with regard to your property and your assets. In some cases, people feel they don’t need to list property because it’s either paid for or it’s in another state or someone else’s holding onto it. The truth is all of your property must be listed in either a chapter 7 or a chapter 13 bankruptcy case. Your attorney will you advise you if any property is at risk and if so, he or she will discuss the proper measures and likely solutions to save that property or to buyout the trustee’s interest in that property.
