Millions of people in the U.S. struggle with debt. While many people can find a way to deal with debt and eventually pay it off, others find that the line between manageable and unmanageable debt is very thin and easily crossed.
Under some circumstances, it may be wise to consider filing for bankruptcy protection in order to get a handle on finances and make a fresh financial start. However, misconceptions about bankruptcy, including the thinking that you will lose everything, can make people hesitant to explore this option. It can be crucial for people to understand that there are things that you can protect and keep, even if you file for Chapter 7 bankruptcy.
To begin with, readers should know that Chapter 7 is a very aggressive means of resolving debt problems. Through Chapter 7, a person's qualifying debts will be discharged. First, however, certain assets will be liquidated to pay off as much debt as possible.
Not every asset is liquidated. If an asset is determined to be a necessity, it can be exempt from the bankruptcy process. Generally speaking, exempt assets include:
- Interest in a motor vehicle, as long as it does not exceed $1,000
- Your home
- Medically-prescribed health aids
- Assets in medical savings accounts, tuition programs and hurricane savings accounts
- Disability benefits
- Disposable earnings, up to $750 per week
There are other exemptions that you may be able to claim, but it is crucial to note that every case is different. Certain assets may be exempt for some people but not for you. Because of this, it can be crucial to discuss your options with an attorney.
Unfortunately, being in debt is not only frustrating and frightening, it can also make people feel embarrassed. Many people try to ignore it or try to tackle it on their own rather than ask for help, but this can be a costly mistake. Debt problems do not go away on their own and while the process of filing bankruptcy can be overwhelming, working through it with the help of an attorney can help people get control and get back on track.