Whether you are filing for Chapter 13 or Chapter 7 bankruptcy, you should be familiar with some of the basic bankruptcy rules including cases in federal bankruptcy statutes in addition to your state’s statutes.
These outline who is eligible to file for Chapter 13 and Chapter 7 bankruptcy, which of your debts will be completely discharged in the bankruptcy process, the procedures associated with a typical bankruptcy case and what property you will be able to protect in a Chapter 7 bankruptcy case through your exemptions. Although bankruptcy can give an immediate debt relief from individuals who are in over their heads financially, it does not deal with every type of debt, including most tax debts, child support, student loans, alimony and secured debts.
Consulting with an attorney well in advance can give you a good overview of what you can expect. The exemptions you will be eligible to claim in the bankruptcy process are dependent on the state in which you live. The amount of property that you are able to protect in both the Chapter 7 and a Chapter 13 bankruptcy depend on the specifics of your case and the exemptions you choose to claim. There are federal bankruptcy exemptions that will enable you to protect some level of equity in your various assets.
One of the most frequently used federal exemptions has to do with your home, but there are other exemptions as well. Each state has their own set of exemptions in particular which is why it can be so valuable to speak with an experienced bankruptcy attorney in your individual state to determine what will work for you. While these are not that different from the federal bankruptcy exemptions, the exemption amounts differ significantly from one state to another.
Other states may have generous exemptions, whereas others are more strict. Whether or not you are able to use the federal or the state exemption system
will depend on the place where you currently reside. Many states prohibit residents from being able to take advantage of federal exemptions, however, some states offer you the choice between the federal and the state exemptions.
The following states will give you the option to choose between the federal exemptions and the state exemptions:
If you are unable to use any state’s exemptions as a result of the above rules, you’ll be eligible to pursue federal bankruptcy exemptions. The right attorney can walk you through what you expect in a bankruptcy process.