Jump to Navigation

What are exempt vs non-exempt items when filing for Chapter 7?

Although it doesn't happen usually overnight, a person can wake up and realize that he or she is too far in debt to be able to financially recover without help. While many consumers rush to file for Chapter 7 bankruptcy after realizing the truth of their financial situations, some New Jersey residents try to avoid bankruptcy because they fear that they will lose all of their possessions by filing. However, that is not the case. There are certain assets that are considered exempt from the liquidation process.

According to the U.S. Bankruptcy Code, there are items that are considered exempt and there are items that are considered non-exempt. Items that are exempt are those that are considered to be basic necessities that a person needs to be able to live and work, such as a car, clothing and household appliances. Items that are non-exempt are those that are unnecessary for working and everyday life. Examples of non-exempt items include second homes and multiple vehicles, art collections and investments.

When one files a Chapter 7 bankruptcy in the state of New Jersey, his or her estate is taken over by a bankruptcy trustee. The trustee will then divide the debtor's assets into exempt and non-exempt items. The non-exempt items will be sold off to pay back the person's debts. The exempt items will be excluded from the sale.

Once debtors understand the difference between exempt and non-exempt assets, they can better decide if Chapter 7 bankruptcy is the right choice for their financial situation. Many New Jersey residents who take the time to learn about their options choose Chapter 7 every year. After the bankruptcy process is over, and their debts have been discharged, they also may find the financial freedom they were seeking.

 

 

Source: FindLaw, "Exempt vs. Non-exempt Property Under Chapter 7", Nov. 2, 2014

No Comments

Leave a comment
Comment Information

Contact Us

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close
Subscribe to This Blog's Feed Visit Our
Bankruptcy Law Website

Office Location

Law Office of Robert Braverman, LLC

South Jersey
1060 North Kings Highway, Suite 333
Cherry Hill, NJ 08034
Phone: 856-254-2196 
Toll Free: 800-759-0767
Fax: 856-414-1230
Map & Directions

Willingboro Area Office
Law Office of Robert Braverman, LLC

1848 Burlington Mount Holly Rd (Route 541)
Mount Holly, NJ 08060
Phone: 856-254-2196
Toll Free: 800-759-0767
Willingboro Area Office

Center City, Philadelphia
15th Floor
1515 Market Street
Philadelphia, PA 19102
Map & Directions

Northeast Philadelphia
7909 Bustleton Avenue
Philadelphia, PA 19152
Map & Directions

FindLaw Network