If you are like others in Eugene who are struggling with debt, then you may have considered filing for Chapter 7 bankruptcy. While this option can help you regain control of your finances, it may require you to forfeit certain assets. These assets, known as non-exempt property, are generally liquidated to help pay off all, or a portion, of your debts. Therefore, it can be important to understand which of your assets may not be exempt to ensure filing for Chapter 7 is the right option for you.
In general, assets beyond those that are necessary for a modern life may be subject to asset forfeiture in bankruptcy filings. Some of the most common items that you may be required to give up in a Chapter 7 bankruptcy case include the following:
- A second vehicle
- Secondary, or vacation, residences
- Bank accounts or cash
- Bonds, stocks and other investments
- Family heirlooms
- Stamp collections, coin collections and other items of value
Unless you are a professional musician, you may also be required to give up expensive musical instruments. The purpose of Chapter 7 bankruptcy is not to leave you destitute, but rather to help you pay off your debts. As such, certain property, such as your primary residence, clothing and household goods, are generally protected.
While state and federal law offers certain protections for exempt properties, it does not guarantee that these assets will not be subject to forfeiture. According to the United States Bankruptcy Court for the District of Oregon, your bankruptcy trustee may be able to liquidate assets if their unsecured value is greater than the value of your exemption. In these cases, the exempt amount will generally be returned to you. For example, if you own a vehicle that is worth $10,000, it may be sold. The trustee would return the allowed federal equity amount of $3,675, or allowed state equity amount of $3,000, to you and apply the remainder toward your debts.
This post has provided an overview of the types of assets that may not be exempt under Chapter 7 bankruptcy. However, it is important to keep in mind that each case is unique. As such, you should consider this only as general information, and not take it as professional legal advice.
