What Property Can I Keep?

In a chapter 7, you can keep all property that the law says is "exempt" from the claims of creditors. You can choose between your exemptions under your state law or under federal law.

In many cases, the federal exemptions are better.

Federal exemptions include:

- $20,200 in equity in your home;
- $3,225 in equity in your car;
- $525 per item in any household goods up to a total of $10,775
- $2,025 in things you need for your job (tools, books, etc.)
- $1,075 in any property, plus up to $10,125 of the unused exemption in your home;
- The right to receive certain benefits such as child support, alimony, social security, unemployment compensation, veteran's benefits, public assistance, and pensions.

The amounts of the exemptions are doubled when a married couple files together.

In determining whether property is exempt, you must keep a few things in mind. The value of property is not the amount you paid for it, but what it is worth now. Especially for furniture and cars, this may be a lot less than what you paid or what it would cost to buy a replacement.
You also only need to look at your equity in property. This means that you count your exemptions against the full value minus any money that you owe on mortgages or liens. For example, if you own a $50,000 house with a $40,000 mortgage, you count your exemptions against the $10,000 that is your equity if you sell it.

While your exemptions allow you to keep property even in chapter 7, your exemptions do not make any difference to the right of a mortgage holder or car loan creditor to take the property to cover the debt if you are behind. In a chapter 13, you can keep all of your property if your plan meets the requirements of the bankruptcy law. In most cases you will have to pay the mortgages or liens as you would if you didn't file bankruptcy.