Chapter 7 bankruptcy filers will not have to sell "all" of their personal property to pay off their bills. In fact, most bankruptcy filers benefit from being able to keep more "exempt" property than they imagined before engaging in the process. Determining what property is exempt from the Chapter 7 process will depend on the laws that apply to the proceedings.
Here are the Chapter 7 exemptions under federal law:
- Homestead: Homeowners can keep as much as $23,675 in home equity, or they can reserve up to $11,850 of this exemption (if unused) to retain other property.
- Automobile: Your vehicle will be exempt up to $3,775.
- Personal property: You can keep various furniture, appliances, books, pets and other personal property under federal law for a total exemption of $12,625 and $600 per item.
- Retirement accounts: Your retirement accounts will be exempt from liquidation up to $1,283,025 in value.
- Health aids: All health-related aids are exempt from Chapter 7 bankruptcy.
- Jewelry: Chapter 7 filers can retain up to $1,600 worth of jewelry.
- Exemption for married couples: Married couples who file for joint Chapter 7 bankruptcy benefit from double exemptions.
State-specific bankruptcy laws will apply to Ohio residents who file for bankruptcy in the state of Ohio. As such, it may be possible that under state law, bankruptcy filers will benefit from much better exemption rates, so it's important that -- if you plan to file for Chapter 7 bankruptcy -- you review the local laws that could apply to your situation with a qualified legal counselor who practices Ohio state bankruptcy law.