When filing bankruptcy what can you keep?

When filing bankruptcy what can you keep?

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When filing for bankruptcy, one of the most common concerns individuals have is what assets they can keep. Bankruptcy is a legal process that allows individuals or businesses to eliminate or repay their debts under the protection of the court. However, it does not mean that individuals will lose everything they own. There are certain exemptions and rules in place that determine what assets can be retained during bankruptcy proceedings. In this article, we will explore what individuals can keep when filing for bankruptcy.

Types of Bankruptcy

Before delving into what assets can be kept, it is essential to understand the two most common types of bankruptcy filed by individuals: Chapter 7 and Chapter 13 bankruptcy.

Chapter 7 Bankruptcy: Also known as liquidation bankruptcy, Chapter 7 involves the sale of non-exempt assets to repay creditors. This type of bankruptcy is typically suitable for individuals with limited income and few assets.

Chapter 13 Bankruptcy: Chapter 13 bankruptcy, also known as reorganization bankruptcy, allows individuals to create a repayment plan to pay off their debts over a period of three to five years. This type of bankruptcy is suitable for individuals with a steady income who want to retain their assets.

Exempt Assets

During bankruptcy proceedings, certain assets are exempt from being sold or liquidated to repay creditors. The specific exemptions vary depending on the state in which the bankruptcy is filed. However, some common exempt assets include:

Primary Residence: In many states, individuals can keep their primary residence up to a certain value. The equity in the home may be protected, allowing individuals to retain ownership.

Vehicle: Individuals may be able to keep one or more vehicles, up to a certain value, depending on the state’s exemption laws.

Retirement Accounts: Most retirement accounts, such as 401(k)s, IRAs, and pension plans, are typically protected during bankruptcy. These funds are considered essential for individuals’ future financial security.

Household Goods and Personal Belongings: Essential household items, such as furniture, appliances, clothing, and personal belongings, are generally exempt from being sold.

Tools of the Trade: Individuals who rely on specific tools or equipment for their profession may be able to keep them, up to a certain value, as they are essential for their livelihood.

It is important to note that the specific exemption amounts and rules can vary significantly depending on the state in which the bankruptcy is filed. Consulting with a bankruptcy attorney or researching the specific exemption laws in your state is crucial to understanding what assets can be retained.

Non-Exempt Assets

While certain assets are exempt from being sold or liquidated, there are also non-exempt assets that may be subject to sale to repay creditors. Non-exempt assets commonly include:

Investment Properties: Properties owned for investment purposes, such as rental properties or vacation homes, are typically considered non-exempt assets.

Luxury Items: Expensive items, such as high-end jewelry, artwork, or collectibles, may be subject to sale during bankruptcy proceedings.

Additional Vehicles: If an individual owns multiple vehicles that exceed the exemption limits, the additional vehicles may be considered non-exempt.

Bank Accounts: Money held in bank accounts, including checking, savings, or investment accounts, may be used to repay creditors.

It is important to disclose all assets, both exempt and non-exempt, during the bankruptcy process. Failure to do so can result in severe consequences, including the dismissal of the bankruptcy case or criminal charges.


When filing for bankruptcy, individuals can keep certain assets through exemptions provided by the law. These exemptions vary depending on the state and the type of bankruptcy filed. Understanding the exemptions and consulting with a bankruptcy attorney is crucial to ensure individuals can retain their essential assets while seeking relief from their debts.


– Nolo: www.nolo.com/legal-encyclopedia/bankruptcy-exemptions-state
– United States Courts: www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-7-bankruptcy-basics
– Investopedia: www.investopedia.com/terms/c/chapter13.asp

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