Filing Chapter 7 bankruptcy can offer much-needed debt relief, but as part of this process, you’ll need to sell some of your property to pay your creditors. However, you won’t lose everything since bankruptcy exemptions protect certain assets. Learn more about exemptions with these frequently asked questions.
What You Should Know About Chapter 7 Bankruptcy Exemptions
What is a bankruptcy exemption?
An exemption refers to any property that cannot be sold or claimed by bankruptcy trustees during your case. Specific laws outline which assets can be considered exemptions. You must file to claim the exemption and protect your property.
What are common examples of exemptions?
Common exemptions granted in a Chapter 7 bankruptcy case include certain retirement plans as well as equity for a homestead or vehicle. Other types of personal property, such as furnishings and appliances, often fall under these exemptions.
However, most of these categories are only protected up to a certain amount, which may not be the full value of your assets.
What is the difference between state and federal exemptions?
The state of Hawaii has its own list of bankruptcy exemptions. Federal exemptions also exist on a national level. These exemptions often have different coverage limits or stipulations. In Hawaii, you can choose to apply for either all state or all federal exemptions, but you cannot use both.
Are there advantages to either type of exemption?
Whether state or federal exemptions are in your best interest depends on your situation. For example, the Hawaii homestead exemption covers up to $30,000 in equity for heads of household, while the federal only covers up to $23,675. On the other hand, federal exemptions offer greater protections for retirement plans and vehicles. Choose based on your assets.
If you need help filing Chapter 7 bankruptcy, contact Greg Dunn, Bankruptcy and Debt Relief Attorney in Honolulu, HI. Since 1996, this attorney has handled over 12,000 bankruptcy cases. To request assistance, visit him online or call (808) 524-4529.