Is bankruptcy Chapter 7 for you? People in serious debt are not out of options to solve their money problems.  One option is to file bankruptcy chapter 7.  This type of bankruptcy is being referred to as a total liquidation of the debtor’s assets.  Under bankruptcy chapter 7, the debtor has to surrender his assets and other possessions so it can be sold and the proceeds to be distributed to the creditors to satisfy his debts.  As provided by the law on bankruptcy chapter 7, properties that can be the subject of liquidation include cash, stocks, bank accounts and other investments, valuable items like stamps and coins collection, family heirlooms, expensive musical instruments if the debtor is not a professional musician and a second car or home.  However, the debtor does not really lose every thing he owns.  Bankruptcy chapter 7 allows exemptions.  Some assets can be retained by the debtor and are exempted from liquidation.  Such exemptions can either be provided by state laws or by federal laws.

Bankruptcy Chapter 7 Laws Explained

One exemption under bankruptcy chapter 7 is the homestead.  This exemption applies to the debtor’s residence or home.  The debtor is allowed to keep a portion of the value of equity he has in his home.  Such value may vary from one state to another.  A debtor may also be required to continue paying the mortgages in order to retain the house.  Another exemption in bankruptcy chapter 7 is the vehicle.  This exemption is allowed if the value in equity of the vehicle is below the requirements of the state.  In order to get the equity, subtract any money owed on the vehicle against its market value.  Like the homestead, a debtor is required to continue paying whatever loans or leases of the vehicle in order to keep it.

Bankruptcy Chapter 7 Wildcard

There is also a wild card exemption under bankruptcy chapter 7.  It allows a debtor to keep the personal property he chooses to retain as long as its value is within the limitation provided by the law.  Other bankruptcy chapter 7 exempt properties include the tools of the trade used by the debtor in his profession, necessary clothing, jewelry subject to a certain value, necessary home appliances or furnishings, pensions, life insurance, portion of unpaid wages, damages, child support and alimony, retirement plans and public benefits.  These bankruptcy chapter 7 exemptions vary depending on what state the debtor lives.

Bankruptcy Chapter 7–A Final Consideration Before Applying

Bankruptcy chapter 7 gives debtors the chance to start a new.  Through the bankruptcy Chapter 7 process, the debtor can pay off his debts without completely losing all the things he owns.