Giving up Property to Debtor during Bankruptcy

Question: How much property does the debtor have to give up in a bankruptcy proceeding?

Answer: Items that the debtor usually has to give up include:

  • Expensive musical instruments, unless the debtor is a professional musician;
  • Collections of stamps, coins, and other valuable items;
  • Family heirlooms;
  • Cash, bank accounts, stocks, bonds, and other investments;
  • A second car or truck; and
  • A second or vacation home.

Certain types of property are exempt, however, which means that the debtor can keep them. Exempt property can include:

  • Motor vehicles, up to a certain value;
  • Reasonably necessary clothing;
  • Reasonably necessary household goods and furnishings;
  • Household appliances;
  • Jewelry, up to a certain value;
  • Pensions;
  • A portion of the equity in the debtor’s home;
  • Tools of the debtor’s trade or profession, up to a certain value;
  • A portion of unpaid but earned wages;
  • Public benefits, including public assistance (welfare), Social Security, and unemployment compensation, accumulated in a bank account; and
  • Damages awarded for personal injury.

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