Chapter 7 bankruptcy: What exactly are exempt assets?
On behalf of The Rollins Law Firm posted in Chapter 7 on Tuesday, November 4, 2014.
For Chapter 7 bankruptcy filers in Mississippi and elsewhere, exemptions are decidedly a good thing.
We touched upon so-called “exempt assets” in an article addressing Chapter 7 bankruptcy on our firm’s website, and revisit the subject here to further drive home some points for interested readers of our blog posts.
We do so in part because of the continuing financial difficulties that are reportedly still being experienced by many people across the country, notwithstanding the nation’s claw back from the serious recession of recent years. A further impetus underlying today’s subject matter simply resides in the fundamental importance of exemptions to most Chapter 7 filers.
Indeed, exemptions are a big deal, given that assets identified as exempt in bankruptcy can be retained by a debtor and stand permanently beyond the reach of creditors.
Briefly, the Chapter 7 process works as follows. A filer must supply the court with a list of assets -- both personal and real property -- and liabilities. Under federal and state statutory law, certain assets are deemed as exempt, up to a threshold amount of value. As we noted in our article, Mississippi filers can exempt $10,000 worth of stated types of personal property.
Only non-exempt property lacks protection from creditors. Indeed, for many Chapter 7 filers, there is very little, or no, non-exempt property that exists. In cases where it does, a bankruptcy trustee will sell it and apportion its proceeds among named creditors.
A would-be bankruptcy filer worried about personal belongings might reasonably want to consult with an established bankruptcy attorney to gain an understanding of the bankruptcy process and to learn how assets will be categorized and handled in his or her case.
Such a consultation often yields good news. As we stated in our above-cited article, many Mississippi residents find Chapter 7 to be “a viable option” for addressing and resolving dire financial challenges.