Will they take my stuff if I file bankruptcy?

One of our clients’ biggest worries when they come in for a bankruptcy consultation is whether the court is going to take away their stuff. And they’re right to be concerned– a bankruptcy trustee has the power to order turnover of certain assets to pay off debt in a bankruptcy. But one of the biggest jobs of a bankruptcy attorney is to advise clients how to protect their things, and we can often help our clients save their assets.

For many of our Chapter 7 clients, we can protect everything they own using the bankruptcy exemptions. There are are two different sets of legal exemptions–state and federal–each with different strengths and weaknesses. Once we’ve had a chance to review what a client owns, we get to choose whichever set of exemptions is more beneficial.

Here are some of the most common exemptions:

  • Some amount of cash
  • Equity in your home (this is the biggest difference between the state and federal exemptions–the state offers a much larger home equity exemption)
  • Car
  • Furniture/household goods
  • Clothing
  • Jewelry (including wedding ring)
  • Individual Retirement Account (IRA)/401(k)
  • Tools of the trade (things you need for a business)
  • Wildcard exemption (federal exemptions only–you can use this to exempt anything that is not covered by another exemption)
  • And others.

Each exemption has a dollar amount cap, but that will depend on whether you choose the state or federal exemptions. Contact us for more information.


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