Bankruptcy is a legal way to get rid of huge amounts of debts that have been bogging you down. Since the purpose of the procedure is to provide the filer with a fresh economic start, certain exemptions are given by the state and federal government. As per Dallas based bankruptcy law firm Recovery Law Group, these exemptions include home, vehicle, personal belongings, retirement plans, tools of the trade, etc. The unsecured creditors cannot stake a claim on this exempted property. The amount of exemption varies from state to state. These exemptions allow a bankruptcy filer some base to start their second financial innings.
According to the bankruptcy code, uniform exemptions are provided to bankruptcy filers; however, states can differ in the exemption amount. Sometimes, the exemption amount varies immensely in the state. Since you can choose between state and federal exemptions, it is vital to consult an experienced bankruptcy lawyer to help make the best choice for you. You can call 888-297-6023 to consult with bankruptcy attorneys.
When any individual files for bankruptcy, they can claim exemptions to protect their assets. In the case of Chapter 7 bankruptcy, debtors can keep exempt property during the period of their bankruptcy proceedings and after it also. Corporations who choose to file for Chapter 7 bankruptcy cannot use the exemptions and thus end up with incomplete liquidation.
When debtors file under Chapter 13, the value of their exempted property is deducted from the estate liquidation amount. The value of the non-exempt property is added to the disposable income to calculate the amount for a repayment plan. If you claim all exemptions, you end up paying less money to your creditors. Any property whose value is less than or equal to the exemption amount can be retained by you during the bankruptcy process.
What happens to the non-exempt property?
Any property which is not exempted under the federal or state exemptions (one of which was chosen by the bankruptcy filer) is handed over to the bankruptcy trustee. The trustee then ensures that the property is sold, and the proceeds distributed among the creditors. Most individuals filing under Chapter 7 bankruptcy Dallas, end up protecting most of their assets from going under the hammer. In the case of Chapter 13, you might be able to protect non-exempt property too if you pay for an amount equivalent to it, to your creditors.
It is important that you find out which property you can keep while filing for bankruptcy before going ahead with the procedure. A qualified bankruptcy attorney can help you understand the various exemptions provided.