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Will I lose my possessions if I file for bankruptcy?

On Behalf of | May 10, 2024 | Chapter 7 Bankruptcy

Falling behind on financial obligations is a common concern. Many people only have enough in savings to cover a few rent or mortgage payments. A job loss or a sudden illness is all it may take to fall severely behind on financial obligations. As debt levels increase, creditors may become more aggressive in their attempts to collect on the amount owed by an individual. Lenders can seek to foreclose on homes or repossess vehicles. They can also take people to court to garnish their wages or place liens against their property.

Someone with low income and high debt levels might consider filing a Chapter 7 bankruptcy. Some people call a Chapter 7 bankruptcy a liquidation bankruptcy. It gets this name from the fact that the courts sometimes require the sale of certain assets to repay creditors. Is it possible for someone pursuing a Chapter 7 bankruptcy to secure a discharge without losing their most valuable property?

Filers can apply special exemptions to their assets

Bankruptcy would not provide much debt relief if people had to give up every asset they had accumulated thus far in life to discharge their debts. Therefore, bankruptcy exemptions exist to allow people to preserve a baseline amount of personal property in a Chapter 7 bankruptcy.

There are both federal bankruptcy exemptions and state-based exemptions available to those in Oregon. Oregon is one of the states that allows people to choose which type of assumptions they use. Making a selection between federal and state exemptions largely depends on what assets someone has.

Federal exemptions allow people to protect up to $27,900 in home equity as an individual or $55,800 if filing as a married couple.  They can also protect up to $4,450 in vehicle equity, $2,800 in professional tools and other assets, including certain retirement savings.

Oregon exemptions, on the other hand, allow people to protect $40,000 in home equity as a single filer or $50,000 when filing with a spouse.  Filers can protect up to $3,000 in vehicle equity, $5,000 in professional tools and various other personal resources.

The right type of exemptions can help people protect most or all of their personal holding. And in cases where people have so much property that exemptions don’t offer adequate protection, a Chapter 13 bankruptcy might be a viable alternative.

Learning more about the rules that apply to Oregon Chapter 7 bankruptcy cases can help those struggling with debt pursue relief. The appropriate use of bankruptcy exemptions can allow people to take control of their debt without endangering their most valuable assets.

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The Law Office of Kim Covington, is a woman owned debt relief agency, and I have helped families, individuals and small businesses, file for bankruptcy relief under the U.S. Bankruptcy Code, for over 24 years.