The realization that you can’t pay your bills every month is disheartening. Eventually, the creditors start pushing hard for payments. They may call, text, or contact you on social media. This is on top of the mailed demands that are probably coming into your mailbox.
Once you decide that you need to do something to get out of debt, you should check the options that you have. This includes filing for bankruptcy. For some who are filing, a major concern is what will happen to the assets they own. All assets are divided into two categories in bankruptcy – exempt and non-exempt.
What are the differences between these two categories?
Property that’s exempt won’t be included in the bankruptcy case. Things that are classified as non-exempt are included in the case and will have to be turned over to the bankruptcy trustee. Typically, you’ll be able to keep your primary residence and one vehicle, but there might be value limits on those. Appliances and pensions are likely exempt. Some furnishings, clothing and jewelry are probably exempt but only up to a certain limit.
Family heirlooms, many musical instruments (unless the filer is a professional musician), second homes and vehicles, and some investments are all non-exempt. Cash, bonds, and stocks are usually non-exempt.
Filing for bankruptcy is a step toward a fresh financial start. Taking the time to understand how your filing will impact your assets is important because it can help you to decide your next steps. Working with someone who’s familiar with this process can help you to learn what you should expect and what you’ll need to do to have your case discharged. Getting started quickly will get you on the way to financial freedom much faster.