One of the biggest fears people have about filing chapter 7 bankruptcy is that the court will liquidate their assets in order to pay off their creditors. Fortunately this is only partly true, for the most part your personal belongings are exempt from being included in the bankruptcy estate and can not be taken by your creditors. Let’s look at this a little further.

When you complete your bankruptcy forms you must list all of your property on Schedules A and B. Sch A includes your real property such as your home. Sch B includes your personal property such as your clothing, furniture, books, cars, investments, basically anything that is not attached to the earth that you own.

After your have listed your personal belongings, you then complete Schedule C which is a list of your bankruptcy exemptions. These exemptions tell the court that you are choosing to not have this property included in your bankruptcy estate. Each state has their own list of exemptions, and some states allow you to choose from the federal bankruptcy exemptions. Each exemption has an amount defined, if your property is worth more than the exemption amount it could be subject to being liquidated in the bankruptcy. If the property is important you can often pay the unexempted amount in order to keep the property.

The value of your personal property is rarely worth enough for the bankruptcy court to liquidate it. Especially personal belongings such as clothing, kitchen utensils, and furniture. If you have a lot of high worth personal property that you are worried about you discuss this with a bankruptcy attorney and get a free bankruptcy review.