When faced with substantial unsecured debt, you may experience overwhelming feelings of anxiety and depression. These feelings typically occur due to believing that you cannot escape the financial burdens that weigh so heavily on you. However, you do have options for potentially discharging most, if not all, of those unsecured debts. If you qualify for Chapter 7 bankruptcy, filing a petition could allow you to take the first step toward a fresh start.
Because Chapter 7 involves liquidating assets in order to pay back creditors, you may worry that you will lose all of your property in the process. Luckily, you will not likely face such an outcome since the process does not mean to leave you with nothing.
During the process of liquidation, the court considers certain property exempt. This factor means that you maintain ownership of certain assets rather than losing them through liquidation. In most cases, this type of property must fall into the category of "necessities of modern life," which means your life would face considerable hindrance if those assets were no longer available to you.
A variety of property could potentially fall within an exemption, including:
- A primary vehicle
- Certain clothing
- Household goods
- Tools of a trade or profession
- A portion of earned wages
- Public benefits
- Personal injury compensation
Of course, the specific exempt property and the amount of property facing exemption may depend on your particular set of circumstances.
Though you may hope to hold on to certain property, if those assets are not considered necessities, they may face liquidation. Property that rarely falls within an exemption includes:
- Musical instruments, unless needed for your profession
- Valuable collectables
- Family heirlooms
- Cash and bank account funds
- Additional vehicles
- Additional homes
These assets typically go through liquidation, and the resulting funds go toward your outstanding debt.
Benefits of Chapter 7
Though you may feel a sense of loss when it comes time to part with assets that you held dear, letting go of the property may prove useful to you in the long run. Rather than having to deal with the crushing mental stress of substantial debt, Chapter 7 bankruptcy may allow you to feel a sense of relief. Once your process ends successfully, you can work toward setting your life on the right financial track.
In order to determine whether this option could suit your circumstances, you may wish to gain advice from an experienced Pennsylvania attorney.