People are sometimes wary of filing for bankruptcy because they know that they are going to have to liquidate some of their personal assets. If you file for Chapter 7 bankruptcy, for instance, some of your debt will be waived. But you may also need to sell off non-exempt assets and pay back a portion of that debt.
One concern that people have is when they have expensive tools of the trade. These are the assets that they already own and they need to make a living – power tools, computers, books, etc. They want to use bankruptcy to get a fresh start from a financial perspective. But if that means they have to sell the tools of their trade, does this really give them a positive financial future?
A full exemption
Some states, along with the federal government, do offer limited exceptions for tools of the trade. These will typically be capped at a certain dollar amount, such as saying you can keep tools that are worth up to $2,800.
In Connecticut, though, there is no limit on this exemption. You do not have to liquidate any of the tools of the trade. If you work in the farming industry, this can even include livestock.
The law is set up this way so that bankruptcy can actually be effective and give people a positive future. Eliminating debt does not help if there’s no way to make a living after bankruptcy. Only by allowing people to retain the items they need can bankruptcy work as intended.
The legal process
As you can see, it’s very important to know how the legal process works when considering bankruptcy. Carefully look into your options so that you know exactly what steps to take.