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Exemptions: What you get to keep in your bankruptcy

Many people in Oregon associate bankruptcy with losing everything. However, if you are considering filing for Chapter 7 or Chapter 13 bankruptcy, you may have a number of assets that will not be sold or repossessed to pay your outstanding debts, depending on your circumstances. We at The Law Office of Kim Covington have often advised clients on how state and federal exemptions may apply to their personal property.

According to the U.S. Bankruptcy Court for the District of Oregon, assets must typically have a value below a predetermined amount in order to be exempt. If they are worth more, then the trustee may take and sell them, and then use the money to pay your creditors. Those assets that are secured by a creditor, such as a car that you owe a balance on, may not be exempt. For example, if you owe less than the vehicle is worth, your equity in the vehicle will need to be below the exemption amount. You will also still have to pay the rest of the debt if you keep the vehicle.

State and federal limits on exemptions are different, and you cannot choose which limits from each you will claim. You must either use the federal or state list, although federal exemptions do not apply until after you have lived in Oregon at least two years. Furniture, clothing, household goods and other personal items are included on either list of exemptions as well as larger items such as vehicles. More information about bankruptcy exemptions is available on our webpage.

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