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What you can and can’t keep in Chapter 7 bankruptcy

There may be a lot of apprehension when it comes to filing for bankruptcy, which is understandable. Most people are already in a vulnerable place by the time they realize it is time to take action. One of the biggest concerns that people have is that they will lose everything they own, from their homes to their cars. This is a common misconception when it comes to Chapter 7 bankruptcy, so here is what people in Illinois can actually expect.

Unlike Chapter 13 bankruptcy in which filers create a three to five year payment plan, Chapter 7 involves selling off some of a person’s personal property to pay off some of his or her debt. However, this only applies to non-exempt property. A person’s exempt property will remain in his or her possession.

Non-exempt property are the assets that can be sold. For example, a person filing for Chapter 7 bankruptcy will likely have to part with expensive musical equipment if he or she is not a professional musician. Valuable collections and family heirlooms can also be sold, as can second properties or vehicles.

Exempt property is considered anything that is necessary for modern life. So while a person might have to part with a second vehicle, he or she can still keep a primary vehicle for things like work, education and more. Professional musicians can also keep the same expensive musical equipment that nonprofessionals have to part ways with. In general, someone’s tools of trade will stay with him or her.

Realizing that it is time to take action about one’s debt is an important but scary step. But it is not a step that anyone has to take alone. An experienced attorney who is knowledgeable in Illinois state law can usually provide invaluable guidance throughout the Chapter 7 bankruptcy process.