Properties Exempted Under Chapter 7 Bankruptcy
"""Bankruptcy is a relief for debtors who are truly concerned about their financial obligations. Insolvency has numerous facets. The debtor petitions for bankruptcy under any of the applicable US bankruptcy chapters.Under chapter 7 bankruptcy, a debtor receives relief in the form of exempted property that he or she may retain. This procedure of protecting a certain amount of property for the benefit of the debtor actually seeks to provide a debtor with a fresh start. As an illustration, in many states the defaulter is permitted to retain clothing, domestic furnishings, and an expensive car (depending on state law, it may be a less expensive vehicle). Even after the conclusion of his bankruptcy case, the debtor will require at least some fundamental assets to continue living. Therefore, the bankruptcy code identifies fundamental needs and provides the debtor with various property exemptions.Just as the standards for exempted property vary from state to state, the district court determines the percentage of exemptions enjoyed by the debtor. There are also few restrictions in this circumstance, as not all of the debtor's assets fall under this category. The assets that are not discharged under chapter 7 of the bankruptcy code are not included in this category. As previously mentioned, properties such as domestic furnishings and automobiles are considered exempt. Similarly, if a debtor has a retirement fund or other similar fund, it is considered to be beyond the creditors' reach. In reality, the quantity of the debtor's exempted property depends on the state in which he resides. A few of the various categories of exempted property for the various districts are listed below.-a) Tools for trade exemption - If the debtor is a motor mechanic or a physician, then the tools he uses to make a living are considered exempted property.b) Exemption for farm tools - If the defaulter is a farmer, the code also allows him to retain the tools if farming is his primary occupation, per district law. In some jurisdictions, however, farm tools also include hand-held implements such as hoes, axes, pitchforks, shovels, and scythes. In contrast, in other states farm equipment also includes ploughs, harnesses, mowers, and reapers.c) Crop exemption - The code also permits the debtor to retain certain agricultural products grown annually or gathered in a single season.d) Building materials exemption - It also allows a debtor to retain a certain quantity of building materials such as lumber, masonry, stones, and iron. Nonetheless, this is not permitted in all states.e) Furnishings exemption - This exemption also allows the debtor to retain a certain amount of furniture, equipment, and other items used to decorate the home, such as carpets, drapes, etc.f) Health aides exemption - the debtor may also save items that assist him in maintaining his health, such as wheelchairs, crutches, and hearing aids. States either exempt all health aids from taxation or cap the total dollar amount.g) Heirloom exemption - The bankruptcy code allows the debtor to pass on certain assets that have a special emotive or monetary value and have been passed down from generation to generation.h) Homestead exemption - This also preserves a specific value or acreage of farmland. The quantity a debtor can protect varies depending on the state in which he resides. In a few states, the homestead exemption is unlimited, meaning that even a property worth millions of dollars cannot be seized under the chapter 7 bankruptcy code. Few states, however, have no homestead exemption at all.i) Animal exemption - The bankruptcy code also permits the debtor to retain certain domesticated pets, livestock, and poultry. The exemption for animals varies by state. In a small number of states, debtors may only retain livestock and poultry, but not pets.j) Appliance exemption - This exemption also allows the debtor to retain certain appliances that consume electricity, gas, or propane, such as a refrigerator, stove, washing machine, etc.k) Arms and accessories exemption - Under this code, the debtor may retain certain weapons that are part of a soldier's outfit or uniform, such as belt packs, but not clothing, etc.l) Household goods exemption - A debtor may also retain his household utensils, such as linens, dinnerware, pots, and pans, and small electronic equipments such as radio toasters, etc. m) Burial exemption - A debtor may also retain a cemetery plot, tomb, monument, or the cash necessary to purchase a burial plot. In some instances, only a few states permit the debtor to claim a burial exemption if he does not claim his homestead exemption. This exemption is offered in the majority of states.n) Jewelry exemption - This protects certain assets of the debtor, including adornment and fashion articles such as jewelry and timepieces. However, costly jewelry is not typically included in this category, although many states do include wedding and engagement rings. In the majority of states, the total exemption for jewelry ranges from $250 to $1,000.o) Motor vehicle exemption - this allows a debtor to keep his or her own vehicle. If his motorcycle costs $10,000, but the state in which he resides allows a car exemption of $2,500, then the debtor still owes $8, 000 to his creditor because he has only $2, 000 in equity ($10,000 - $8,000) for himself (this demonstrates that the debtor can afford his car payments). In contrast, if the debtor fails to pay, the creditor can seize the vehicle and sell it at auction.
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