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Friday, February 20, 2009

Why Bankruptcy Chapter 7 Exemptions

By Jim Peters

Do you have debts that are hard to pay? If so, you may not have any option other than filing for bankruptcy. There are many people who opts for Chapter 7 Bankruptcy. In this chapter, all your non-exempted assets will be sold or liquidated which can ultimately be an effective way for you to pay off all your existing debts. As this is a supervised procedure, the authority will appoint a personnel who has the authority to sell all the non-exempt assets of the debtor and distributes between the creditors. Bankruptcy chapter 7 exemptions means that there are assets that cannot be sold when chapter 7 bankruptcy is filed. Although chapter 7 is the least favorite method of bankruptcy, with the help of exemptions, a debtor can effectively reduce your personal damage and you don't have to sell everything.

The debtor selects property that he/she is eligible to keep from a list containing state exemptions or exemptions provided in the Federal Bankruptcy Code. The property shall be separated as exempt or non-exempt once the trustee files a property exemption report. Take note that while the basic law may be the same, some exemptions may vary in other states.

Secured debts are first paid off but if the debt is unsecured, there may be a situation that the creditors of unsecured debts receive partial or no payment. The trustee will pay the right creditors in the right amount. Note that to enjoy the benefits of bankruptcy chapter 7 exemptions, the debtor must file the case in the state where he/she resides for a period of 730 days before filing for this type of bankruptcy. Alternatively, the debtor may also file the case in a state where he/she has spent most of the 180 period prior to the 2-year period.

Federal exemptions may also be provided including retirement benefits, death disability benefits, survivor's benefits and miscellaneous. You should find out more about the Federal exemptions because not all the states are the same.

Yes, bankruptcy is not a good alternative and worst still, your credit score may take a major hit because of it. You will lose all your personal belongings and you need to start your business all over again from nothing. It must only be considered when there is no other option.

However, if in a worse case scenario, then get to find out more about bankruptcy chapter 7 exemptions as you can reduce your personal loss and make use of it in a way to help get back on your feet at the earliest.

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