Bankruptcy exemption law matters in Chapter 13 bankruptcies too
On behalf of The Rollins Law Firm posted in Bankruptcy Exemptions on Wednesday, May 6, 2015.
Among the laws that are in place here in Mississippi are laws involving what property can be classified as exempt in a bankruptcy. One of the effects being classified as exempt will generally have on a property in a bankruptcy is that it will make it so the property cannot be liquidated in the bankruptcy.
Liquidation tends to be a big area of concern in a Chapter 7 bankruptcy. Thus, exemption law can be very impactful in a Chapter 7 bankruptcy, as it can dictate what sorts of property a debtor will not have to worry about losing in the bankruptcy.
Now, in a Chapter 13 bankruptcy, the reorganization/repayment plan can often be set up to avoid property losses for a debtor. Thus, generally, liquidation is not a major concern in a Chapter 13 bankruptcy. This does not, however, mean that exemption law does not matter in a Chapter 13 bankruptcy.
One reason for this has to do with how the minimum amount a debtor needs to pay in a Chapter 13 bankruptcy reorganization/repayment plan is generally calculated. The value of the non-exempt property the debtor has is used in calculating this. Thus, what exemption law is can impact what property of a debtor will and will not be considered in this calculation, which in turn can impact the minimum amount that the debtor will be required to pay in their Chapter 13 plan.
Thus, when a person is getting a Chapter 13 bankruptcy here in Mississippi, it can be important for them to understand what state bankruptcy exemption laws apply in relation to their property and what effects such laws can have in their bankruptcy. Bankruptcy attorneys can provide information and help to Chapter 13 bankruptcy filers when it comes to exemption law issues and other bankruptcy law issues.
Source: FindLaw, "Exempt Property in a Chapter 13 Bankruptcy," Accessed May 6, 2015