Protecting Your Property

Property That Is Exempt

You can keep certain property subject to certain dollar limitations (and the amounts are doubled for spouses filing jointly.) Such property includes:

• $750 on any one item of property and not to exceed a total value of $7,500 for household furnishings, household goods, appliances, wearing apparel, animals, books, and musical instruments;

• $1,000 for jewelry;

• $2,500 business equipment and tools of the trade;

• $7,000 for one motor vehicle;

• provisions of food or water together with storage containers and shelving, sufficient for 12 months of use;

• a firearm valued at $750 or less.

• cash value of $5,000 in a life insurance policy;

• $800 in any tangible personal property;

• 75% of wages;

• amounts in qualified retirement plans (subject to certain limits);

You can also keep the following property to the extent reasonably necessary for the support of yourself and your dependents:

• benefits paid or payable by reason of disability or illness;

• money or personal property received, and rights to receive money or personal property for alimony, support, or separate maintenance;

• proceeds of insurance, a judgment, or a settlement, or other rights accruing as a result of bodily injury or wrongful death; and

• benefits paid or payable on the death of an insured, if the individual was the spouse or a dependent of the insured.

You are entitled to exemption for property without limitation for:

• a burial plot;

• health aids;

• benefits under federal social security, or veteran's benefits; and

• unemployment compensation.

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Property That Is Not Exempt

Unfortunately, some property is not exempt. That means the bankruptcy trustee will take the property and sell it to pay your creditors. Such property includes:

• Cash or money held in a bank account;

• Investments;

• The value of any businesses you own;

• Property owned by an LLC or corporation;

• Recreational vehicles, snowmobiles, ATVs, boats and trailers; and

• Amounts due under promissory notes or as a result of litigation.

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Planning Opportunities

Many very significant planning opportunities exist to allow you to protect your property. The key is to convert property that is not exempt (and which you would lose in a bankruptcy filing) to exempt property that you can keep after you file bankruptcy.

But be careful; there are many traps that you need to understand. A knowledgeable bankruptcy attorney that has experience filing both Chapter 7 bankruptcy and Chapter 13 bankruptcy is really important to help you protect your property.

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