The concept behind bankruptcy is a “Fresh Start” a second chance at a new beginning. Well, if you are left with nothing, broke and naked, it would be practically impossible to start over!
So, the bankruptcy code provides for certain properties to be held to exempt from creditors, meaning that you are allowed to keep them.
For example, you have a homestead exemption which allows you to protect the equity in your home up to a certain amount. The same applies to your car, bank accounts, cash, household furniture and appliances, jewelry, and clothes. Some properties are completely exempt, such as pensions and retirement accounts. Each category of property has a specific dollar limit, and there is a wildcard exemption which can be applied to any type of property.
My clients are always relieved to know that they are allowed to keep their property.