When you file for Chapter 7 bankruptcy, your top consideration is what you will lose as a result of the process. Chapter 7 bankruptcy discharges all of your debts, but in doing so it forces you to give up some of your property to pay off your creditors.  Fear of losing assets is one of the top reasons that people postpone a bankruptcy filing, but what many people don’t know is that the federal government offers protections for certain types of property that may allow them to hold on to the things they hold most dear. The protected property is covered by bankruptcy exemptions, and if you are married and filing for bankruptcy jointly then the dollar value of each of your exemptions can be doubled.

Some exempt items, including retirement accounts, have no dollar limit. Each exemption available for personal assets varies depending upon the category of property that it falls into, and each has a specific dollar limit, which is updated every three years. These dollar values and exemptions provide those who file for bankruptcy with the ability to hold onto a certain amount of their possessions while not permitting them to live in a way that flies in the face of having all of their debt discharged. For example, a person who is married would not be forced to sell their wedding bands as long as they are valued at less than the exemption of $1,700 (or $3,400 if the amount is doubled) but would not be able to hold onto a $25,000 diamond engagement ring.

Married couples are able to significantly increase the value of assets that they are allowed to keep because they are permitted to double all of the exemption amounts. The dollar amounts that are in effect for 2020 are shown below:

• Household goods – up to $13,400, or $26,800 for a married couple (no single item can be valued at more than $625)
• Your home – up to $25,150 of equity, or $50,300 for a married couple. Those who don’t own property can use up to half of that amount to add to their wildcard exemption
• Wildcard exemption – an item that belongs in another category or has no category
• Motor vehicles – $4,000, or $8,000 for a married couple
• Jewelry – $1,700, or $3,400 for a married couple
• Work tools – $2,525, or $5,050 for a married couple

To learn more about how filing for bankruptcy would affect you, contact our experienced bankruptcy law firm today.