When you file for bankruptcy, you are allowed to exempt (keep) property that you’ll need to hold down a job and maintain a household. Your state’s exemption statute will list the type of assets that you can protect.
Most states allow you to retain the following property:
- household furnishings, such as a couch, dining room table, and bed
- household goods, such as cookware, dishes, and towels
- a modest amount of equity in a vehicle
- tools needed in your business or trade
- retirement and pension accounts, and
- some jewelry.
Your state exemption statute might allow you to keep additional property, such as a certain amount of equity in your primary residence (the home you live in), or your state might have a “wildcard” exemption that allows you to exempt any property of your choosing up to a particular value.
Most people who file for bankruptcy can keep all of their assets. You’ll likely be able to do the same as long as you don’t own the expensive items most frequently lost to bankruptcy, such as a luxury vehicle, a boat, vacation property, or pricey artwork. Even so, it’s important to know what you can and cannot keep before filing. You should expect the court to hold you responsible for any mistake that you make, especially when it involves your property.
If you own anything of value, it’s best to be proactive. An experienced bankruptcy attorney can review your assets and tell you what you can protect before you file for bankruptcy.
(You can find out more by reading If You Declare Personal Bankruptcy, What Can You Keep?)
Go to the main bankruptcy FAQ page.