If you’re filing for bankruptcy, you might be assuming that you’ll lose your house and personal property. This is rarely true. Many people keep control over their assets through the use of bankruptcy exemptions, which are special rules that allow people who are filing for a Chapter 7 bankruptcy to keep certain property if its value is less than the amount of the exemption. Read on to learn more about how exemptions work.
How Do I Protect My Home During Bankruptcy?
During your bankruptcy, you can protect your home in two main ways. The first is through a homestead exemption, which covers residential real estate equity (what you own of your house when you consider what you owe against it) up to a certain amount. In Indiana, a debtor filing for Chapter 7 bankruptcy can protect up to $19,300 per person in residential real estate or mobile home. There is also a personal property exemption that protects equity in nonresidential real estate and personal property up to $10,250.
Another route to protecting your home is to use bankruptcy to halt a foreclosure, which is usually possible all the way up to the point of a sheriff’s sale. So if you’re about to lose your home, you may be able to use bankruptcy to stop the process.
How Can I Protect My Personal Property?
If you have personal property, you’d like to save during a Chapter 7 bankruptcy, there is a personal property exemption of up to $10,250 per person to protect it. This covers the (liquidation) value of your household goods, furniture, electronics, clothing, and equity in your vehicle. It is rare that there is a problem with a person having too much personal property. The other main category of exemptions is called intangible assets. This would include cash or cash equivalents such as bank accounts, claims against others for damages, bank accounts, non-retirement stock or bond holdings, tax refunds, and money people owe you. We can held each person in a bankruptcy hold onto $400 of intangibles available on the date the case is filed. In addition, there are exemptions for health aids, retirement plans, health savings accounts, spendthrift trusts and military equipment and others.
Do Exemptions Automatically Protect My Property?
Here’s something many people don’t realize: Exemptions are not automatic. Your belongings won’t automatically be protected, even if you qualify for exemptions. To ensure your property is covered by exemptions, you must apply for them when you file your other bankruptcy paperwork. A bankruptcy attorney can help you understand your exemption options and file for them efficiently and correctly.
Can Anyone Object to My Exemptions?
An interim bankruptcy trustee will review your exemptions and see if they are allowable under bankruptcy law. Usually, they will work with you to ensure you receive the right exemptions. But if they believe you are being deceptive or trying to use exemptions in bad faith, they may file an objection with the court to deny them. Seek the advice of a bankruptcy attorney who can help you use Indiana exemptions successfully.
What if I Have Assets that are Not Exempt?
If you have assets that exceed the allowed exemptions, your attorney will discuss options, such as a Chapter 13 bankruptcy, that can help you hang onto items that might be taken for the benefit of your creditors in a Chapter 7.
Sawin & Shea – Indianapolis Bankruptcy Attorneys
Filing for bankruptcy is not the end. It’s the beginning of a new financial life for you. The Indiana bankruptcy attorneys at Sawin & Shea can help you get rid of the overwhelming debt and advise you on life after bankruptcy. We are here for you during this life-changing process. Please do not hesitate to call us today at 317-759-1483 or send an email for a free consultation. We are ready to help.