Will I Have to Give Up My Property?

Although Chapter 7 is a "liquidation proceeding," you will be allowed to keep certain property, as long as the fair market value of each item does not exceed certain amounts. (Fair market value is not your original purchase price. It is sometimes described as "garage sale value," or how much actual cash you would receive by selling the item to an unrelated party.) Certain property such as your working tools, insurance, household furnishings, radio, television, musical instruments, some savings and checking accounts, your car and your home may be entirely protected, or "exempt," through bankruptcy. For more information on exempt property, contact the Bankruptcy Court or see the Resources panel of this pamphlet for other sources of information. Unlike a Chapter 7 bankruptcy, a Chapter 13 case usually allows you to retain all of your "non-exempt" assets, and over a three- to five-year period of time you pay to the court the value of those non-exempt assets for distribution to your creditors.