Chapter 7 bankruptcy offers you a fresh start if you’re overwhelmed by debt. Most of your debts are discharged or wiped out, or you pay them off over time according to a schedule and budget. Freedom from your debts isn’t free, though. Some of your property may be taken or sold to pay some of your creditors.
But you don’t lose everything. After the Chapter 7 bankruptcy filing, you’ll still need basic possessions and assets to move forward. The U.S. Bankruptcy Code recognizes these basic needs and gives you property exemptions. If property is exempt, it can’t be used to pay your creditors’ claims.
You include a schedule or list of your exempt property when you file your bankruptcy petition. The schedule should include:
- A description of each item you’re claiming as exempt
- The specific law that allows each exemption
- The fair market value of each item you’re claiming as exempt
Your creditors or trustee can object to your exemptions within 30 days after the meeting of the creditors (called a 341 meeting). This meeting takes place very soon after your case is filed.
If someone objects, it’s his or her burden to prove the property isn’t exempt or it wasn’t claimed properly in your schedule. If no one objects, the property listed in your schedule is excluded from your bankruptcy estate – it can’t be used to pay your creditors
