Bankruptcy exemptions play a significant role during the filing process.
They help debtors obtain protection for their assets and personal property
against creditors. In short, exemptions provide legal options for debtors
to keep their possessions during and after bankruptcy.
Chapter 7 bankruptcy exemptions help determine what you can keep, while
Chapter 13 bankruptcy exemptions help debtors obtain affordable payment plans.
Many consumers believe you have to give up personal property when you file
bankruptcy. Exemptions provide protection for a number of assets and property
while in bankruptcy. There are different types of exemptions and they
each provide property protection based on asset value. Some exemptions
will protect the entire value of an asset or personal property. There
is also what is called a wildcard exemption that can provide additional
protection.
If you plan on filing
bankruptcy you should review the roles
exemptions may play in your case. In Chapter 7 exemptions provide property protection
so your property and assets are not used to satisfy creditors. Chapter
13 exemptions allow you to keep your property while making payments to
your creditors. This helps in making monthly payments affordable based
on your income ability.
Exemptions are available at the state and federal level. Depending on the
state you live in you may be able to use exemptions at both levels. In
some cases, it may be better to use federal exemptions over the state
level. Usually, at the federal level you can get more protection since
the amount of coverage is higher. There are exemptions available for various
property items such as your house, vehicle, jewelry, and others.
Reference:
https://www.nolo.com/legal-encyclopedia/bankruptcy-exemptions-overview.html