Declaring Bankruptcy: What Property Can I Keep? - Westgate Law

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Declaring Bankruptcy: What Property Can I Keep?

When filing a Chapter 7 bankruptcy, filers are allowed to keep all property that is classified as exempt from the claims of their creditors. Every filer should check with their bankruptcy attorney to verify the specific exemptions in their state before filing so they aren’t surprised by the details. Individuals who have less than 2 years history of residence in their current state, may be required to utilize the exemptions of their previous state of residence for purposes of their bankruptcy filing. Those filing a California bankruptcy will use state exemptions (as California is an opt-out state) unless residency issues arise and provide additional options that should be considered. It is also important to consider special federal bankruptcy exemptions that could apply even in “opt-out” states that could protect retirement funds in pension plans and IRAs.


When determining property exemptions, remember that the value of your property is not dependent upon the price you paid for it. It is simply that amount that it is worth at the time of your bankruptcy filing. This can be especially of note in relation to furniture, household goods and personal vehicles. Their value is typically a lot less than the amount you would need to pay in order to buy a replacement (or what you originally paid). When determining value of mortgaged property, you only count the equity. That means the value of the property minus the amount owed against it. Exemptions can be of great use in retaining property when filing for bankruptcy, but will not prevent a loan holder from taking the property to cover the debt during a period of non-payment.


For additional information regarding what property can or cannot be retained after your debts are discharged through California bankruptcy, contact the experts at Westgate Law.  

About the Author

Justin Harelik

Justin has a singular goal: to get people out of financial distress and move them to financial stability and prosperity. He does this by combining 15 years of in-depth experience in bankruptcy, credit management, debt negotiation and student loan modifications, and he does it with both English and Spanish-speaking clients.

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