Filing for bankruptcy could have you feeling like you're in the middle of a 1980s "rags to riches and back to rags again" type of movie. We all remember the scene from Rocky when the banks came to collect all of the expensive luxury items he had in his home. The thing is, bankruptcy isn't like this for most people, and you'll probably be surprised by the property that is exempt from liquidation.
Bankruptcy isn't meant to leave you penniless and possession-less. It's supposed to give you a fresh financial start on firm and solid ground, so you'll get to keep the things that are essential to your life. In most cases, you can keep your car, furniture, clothing and other necessities -- even some of the equity you've built up in your home.
Here's a quick review of typical items you can expect to be exempt from Chapter 7 liquidation:
Homestead exemption: The homestead exemption will let you keep some of the equity you have in your residence. That might be as much as $390,000 if you qualify for Minnesota homestead exemption laws, but it could be higher if you qualify for a state homestead exemption.
Vehicle exemptions: Your car, up to a certain value limitation, will also be exempt from liquidation.
Personal property: You'll benefit from having much of your personal property -- even your jewelry and home appliances and furniture -- exempt from liquidation. Of course, value limitations will also apply.
Professional items: The tools you use for your trade, like computers, electronics, work tools and instruments (if you're a musician) will also be exempt from liquidation.
Do you have personal property you're worried about losing in Chapter 7 bankruptcy? A skilled Minnesota bankruptcy attorney will be able to tell you whether or not you're likely to keep this property after going through Chapter 7 liquidation. In lots of cases, bankruptcy courts will determine if a specific item should be exempt on a case-by-case basis. Therefore, your attorney may be able to formulate arguments to try and get this property exempt if it doesn't fit neatly into the categories above.