In the vast majority of bankruptcy cases, debtors are able to keep all of their real and personal property. It is the rare exception that property is taken.
Bankruptcy law allows debtors to use certain exemptions to protect property, both real and personal. Most debtors are able to keep the property they own because its value or available equity in the property falls within available exemption limits. The exemptions available to a debtor are determined by a number of factors including what state you live in, and how long you have resided there.
Debtor’s concerned about losing specific property in a Chapter 7 should consider Chapter 13, which allows individuals to keep property that would otherwise be sold for the benefit creditors in a chapter 7, provided a general rule is adhered to. As long as the debtor contributes to their unsecured creditors, a dollar amount equal to the “non exempt” value of the asset, the law says the debtor can keep the asset. For example, lets assume you have an asset that is worth $10k, and all the available exemptions have been maxed out, such that the $10k asset is non exempt. In a chapter 7 bankruptcy, this asset would be taken by the trustee, sold, and the money used to distribute to your creditors on a pro rata basis. Under chapter 13, however, as long as you pledge an equal $10k to your unsecured creditors over the course of your chapter 13, you can keep the asset. A knowledgeable bankruptcy attorney would be able to tell you what property, if any, is subject to liquidation for the benefit of creditors, before filing, so an informed decision can be made as to how best to proceed in your particular situation.
