One of the primary factors that affects people’s decision to file for bankruptcy is what assets they can keep and what assets they’re going to have to hand over to the bankruptcy court to satisfy their debts. If you’re in this position, it is imperative that you understand which assets are going to fall under which category.
There are two types of property in the bankruptcy system. One of these is exempt property. The other is nonexempt property. Exempt property is the property that the bankruptcy court will allow you to have. You don’t have to turn this property over to the bankruptcy court, so you can continue to use it.
Nonexempt property is the property that you will hand over to the bankruptcy court. The trustee will liquidate these assets and use the proceeds to pay off your accounts with creditors. Typically, you can keep more assets if you file for a Chapter 13 bankruptcy then you can if you file for a Chapter 7 bankruptcy. This is because a Chapter 13 bankruptcy is considered a working man’s bankruptcy, which means that you are going to continue to make payments to the bankruptcy court.
A Chapter 7 bankruptcy is known as a liquidation bankruptcy. In this bankruptcy, the proceeds from your assets are the only payment that your creditors are going to receive.
As you can tell, the differences between these two forms of bankruptcy and the exemptions are quite remarkable. You must decide what is right for you before you file. There are also other qualifications for each bankruptcy that you have to consider. Once you are aware of these and know which form is right for you, you can get your case filed.