What Is The Difference Between Exempt And Non-Exempt Assets In Chapter 7 Bankruptcy
One of the forms your bankruptcy lawyer will have to fill out during your Chapter 7 case is called Schedule C. This form is designed to help you separate your exempt and non-exempt assets during your bankruptcy case. All the assets you own will fall into one of these two categories, and it is always better if your assets are considered exempt. Here are three things to understand about how exempt and non-exempt assets are treated in Chapter 7.
What Is The Difference?
The difference between exempt assets and non-exempt assets determines whether you can keep the items or not. All items considered exempt are those that you are allowed to keep. The trustee handling the case will not be able to seize any asset that is listed on the Schedule C as exempt.
On the other hand, any non-exempt assets you have are subject to be seized by the trustee. This does not necessarily mean the trustee will take them, but it does mean that he or she has the right to. The point of seizing your assets is to sell them to raise money. All money raised in your case will be used to pay the fees of the trustee and the creditors you owe money to.
What Assets Are Considered Exempt?
The big question people have when filing for Chapter 7 is what assets they will get to keep. Typically, you will be able to keep any assets you have that have loans attached. The only exception to this is if an asset is valuable and is almost paid off. If this is the case, the trustee might not allow it to be exempt. In most cases, the following items will be classified as exempt in a Chapter 7 bankruptcy:
- Your car
- Clothing
- Household goods and appliances
- Pensions
- House
The trustee will not seize items you need for your everyday life, but he or she might ask you to surrender any non-exempt assets you have.
What Items Are Non-Exempt Assets?
Non-exempt assets are typically things you do not really need, and they are often things that could easily be sold for cash. This can include:
- Extra vehicles you own
- Boats or RVs
- Vacation property
- Cash on hand and in the bank
- Valuable collections
Filing for Chapter 7 offers a lot of benefits, but it can also present the risk of losing things you own. If you are interested in learning more about Chapter 7 bankruptcy, contact a bankruptcy attorney (such as William C Fithian III) near you.