“Non-Exempt” Property: Which Assets Are on the Table in Your Personal Bankruptcy?
When you file for personal bankruptcy protection under Chapter 7 or Chapter 13, you are entitled to keep many of your assets regardless of your financial circumstances. These are your “exempt” assets, and they include things like your furniture, clothing, retirement savings, and even your home and vehicle if you can keep making payments after getting relief through the bankruptcy process.
But, for most Chapter 7 and Chapter 13 bankruptcy filers, at least some of their assets will be on the table. In a Chapter 7 bankruptcy, they will need to use these “non-exempt” assets to help pay down what they owe; and, in a Chapter 13 bankruptcy, these assets will play a role in determining how much they must pay to their unsecured creditors (i.e., the credit card and utility companies).
Which of Your Assets Are “Non-Exempt” in a Chapter 7 or Chapter 13 Bankruptcy?
So, which of your assets could be on the table if you file for bankruptcy under Chapter 7 or Chapter 13? Generally speaking, “non-exempt” assets in a personal bankruptcy include:
Real Estate That Isn’t Your Primary Residence
If you personally own a rental property, vacation home or vacant land, this piece of real estate will typically be classified as “non-exempt” property. While there is an exemption for your primary residence (if you own your home), this exemption generally doesn’t extend to other properties.
A Second (or Third) Vehicle, Unless You Are Married
Similarly, while you are allowed to keep one vehicle so that you can drive to work, run errands and take your children to school, if you own multiple vehicles, your second (and third) vehicle will generally be classified as “non-exempt” property. The one major exception is if you have a spouse: If you are married, you and your spouse are each entitled to keep a vehicle when going through the personal bankruptcy process.
Boats, ATVs and Other Recreational Vehicles
While you are entitled to keep a car, truck or SUV when you file for bankruptcy, you aren’t entitled to keep your boat, ATV or any other recreational vehicles you may own. Although you may have options for keeping these after your bankruptcy, you will need to take additional steps in order to do so—as we discuss in greater detail below.
When you file for bankruptcy, you are entitled to keep most of the items that make your house a home. For example, you are entitled to keep your furniture and appliances—including a TV for your living room. In most cases, however, any additional TVs will be classified as “non-exempt” property.
When you file for bankruptcy, you are also entitled to keep clothing and other personal items that you need in order to live your day-to-day life. However, this does not apply to luxury items. Expensive jewelry, watches, shoes, coats, and other similar types of luxury items will be classified as “non-exempt” property in most cases.
Collections, Artwork, Musical Instruments and Family Heirlooms
The U.S. Bankruptcy Code also classifies collections, artwork, musical instruments and even family heirlooms as “non-exempt” property in most cases. However, there are some exceptions. For example, if you are an artist, you can keep your own artwork, and if you are a musician, you can keep any instruments you rely upon to earn a living.
Non-Retirement Investment Assets
One of the most important bankruptcy exemptions is the exemption for retirement accounts. Generally speaking, your retirement savings should not be at risk when you file for a Chapter 7 or Chapter 13 bankruptcy. However, if you have any non-retirement investments (including stock trading accounts or cryptocurrency wallets), these may be on the table in your personal bankruptcy.
Options for Keeping “Non-Exempt” Property When Going Through a Personal Bankruptcy
Importantly, just because a piece of property is “non-exempt,” this doesn’t necessarily mean that you will lose it if you file for bankruptcy under Chapter 7 or Chapter 13. In fact, there are several ways that your lawyer may be able to help you protect all types of “non-exempt” assets during the bankruptcy process.
How can a lawyer help you protect your “non-exempt” property? Depending on your individual circumstances, your options may include:
- Exchanging “Exempt” Property for “Non-Exempt” Property – If you have “non-exempt” property that you want to keep and “exempt” property that you are willing to give up, your lawyer may be able to help you make an exchange during the bankruptcy process.
- Repurchasing “Non–Exempt” Property During Your Bankruptcy – When you give up “non-exempt” property during a personal bankruptcy, the bankruptcy will sell this property in order to pay down your debts. In some cases, it is possible to repurchase your assets instead of allowing them to be purchased by a third party.
- Seeking a Notice of Abandonment – If a piece of “non-exempt” property is of relatively low value or difficult to sell, your lawyer may be able to convince the bankruptcy trustee to file a Notice of Abandonment. When this happens, the property will be returned to you, and it will be yours to keep.
When considering a personal bankruptcy (and going through the personal bankruptcy process), it is important to make informed decisions every step of the way. If you aren’t careful, you could end up losing assets you are entitled to keep or paying more than necessary. An experienced bankruptcy lawyer can help, and if you think filing for a Chapter 7 or Chapter 13 bankruptcy may be your best option, you should discuss your options with a lawyer promptly.
Discuss Your Personal Bankruptcy with Attorney Georgette Miller in New Jersey
There are lots of considerations involved in filing for personal bankruptcy protection under Chapter 7 or Chapter 13. Understanding which of your assets are “exempt” and “non-exempt” is just one of several important issues you will need to consider before deciding how best to move forward. To discuss your personal bankruptcy with attorney Georgette Miller in confidence, please call 866-964-6529 or request a free initial consultation online today.