There are many inaccurate assumptions about bankruptcy. Some in New Jersey may believe that this process will leave them destitute and without personal property, but that is not the case. Bankruptcy may not be your first choice of ways to deal with your financial struggles, but it may actually be the best way for you to deal with certain types of debt once and for all.
Chapter 7 bankruptcy is liquidation bankruptcy, which means that you may lose some of your personal assets. However, you will likely be able to keep many of the things that are important to you. Bankruptcy law provides several exemptions for applicants, which means that you will be able to discharge certain types of debt without losing all of your assets and property.
What about your stuff?
Liquidation bankruptcy means that you will give up some assets when filing for Chapter 7. You will have to relinquish certain things in order to liquidate them, and the proceeds will go toward meeting some of the demands of your creditors. Some of the property that is non-exempt during this process includes:
- Second vehicles or second homes
- Valuable collections
- Family heirlooms
- Valuable musical instruments, unless necessary for your work
- Cash, bank accounts and investments
The proceeds from the sale of these things will help alleviate some of your debt before the discharge of remaining balances. Exempt property, which is property you will likely be able to keep, includes the following:
- Your vehicle, as long as it’s worth less than a certain amount
- Necessary clothing
- Tools of the trade and things you need for work
- Appliances and furniture you need for your home
- Jewelry worth less than a certain amount
- Some of the equity in your home
- Unpaid wages you’ve already earned
- Public benefits you already received
- Damages from a personal injury claim
As you can see, property exemptions allow you to keep many of the things that are necessary for you to live normally and go about your daily activities.
Fears about what bankruptcy could mean for your stuff should not hold you back from making a choice that can be good for your financial future. If you have concerns about how this process could impact your life or what you should do to deal with certain types of debt that are hanging over your head, you may find it helpful to learn more about Chapter 7 bankruptcy and other options you may have.