What Assets are Exempt in Bankruptcy?

You are not required to surrender all of your property in bankruptcy.  Some assets are exempt in bankruptcy.  In a Chapter 7 “straight bankruptcy” you are generally able to keep all but your very valuable property, or property with liens which you cannot afford to pay. Your exempt property can include up to:

  • $21,625 equity in your home
  • $3,450 in your car
  • $550 per household item up to $11,525
  • $1,450 in jewelry
  • $2,175 for business tools, books, etc
  • $1,150 of any property plus up to $10,825 of any amount of unused homestead exemption

These amount are per person, and may be doubled in a joint filing. Further, other types of assets may be completely exempt, such as retirement funds.

For this reason, DO NOT give in to the temptation to spend or borrow against your retirement to repay debts.  DO NOT transfer away assets to family or friends to "protect" the asset.  DO NOT repay a family member or friend in anticipation of bankruptcy.  

Doing so does not solve the problem; it just makes matters worse.

Moreover, if you have a regular income, you may qualify for a Chapter 13 “reorganization,” where you can usually keep all your property - even if you would lose it in a chapter 7 - and pay all or a portion of your debts over time. This type of bankruptcy also allows you to repay past due amounts on an automobile or home over time and prevent a foreclosure or repossession.