Chapter 7 Bankruptcy Exemptions Protect Debtors Retirement Benefits

18-Apr-2011 Many fear chapter 7 bankruptcy because they see it as starting from the bottom as opposed to welcoming a fresh start. Unfortunately most people who file for chapter 7 bankruptcy in Chicago aren't left with much of a choice.

Once they file for bankruptcy they will liquidate all of their assets including homes and cars that they own. Once liquidation is complete and payments have been made to creditors the debtor will be discharged of all remaining qualifying debts.

It is important to note that student loans, alimony, child support and back taxes are not debts that can be discharged through bankruptcy.

Many debtors will be happy to learn that there are some exceptions to the liquidation that takes place in chapter 7 bankruptcy in Chicago. For families with their future in mind they will be happy to know that pensions and retirement benefits are exempt from chapter 7 bankruptcy liquidation.

Exemptions vary depending on the state you file in however most states will allow filers to keep up to $1,000 worth of jewelry. The cash value of any insurance policies, disability benefits and survivor benefits are also protected as exemptions of chapter 7 bankruptcy. Public benefits like social security and welfare are protected. Someone can even keep the tools that they own for work and as much as 75% of their wages.

These exempt items are not automatically safe from bankruptcy. The debtor needs to work directly with the trustee so that they fill out a property exemption report. This report has the trustee separate out property that is exempt and non-exempt. All assets should be reviewed carefully with your chapter 7 bankruptcy lawyer because you will want to understand exactly what these exemptions will mean for you.

Chang and Carlin
The content found on the Chang & Carlin site is not legal advice and is purely for informational purposes. The information contained herein is not a substitute for the advice of an attorney and does not create an attorney-client relationship. If you are interested in obtaining information about chapter 7 bankruptcy, chapter 13 bankruptcy, foreclosure services, real estate legal services, you are encouraged to call our law firm at 866-790-8601 or Request a Free Legal Evaluation. Chang and Carlin serves clients in Chicago, Schaumburg, Joliet, Warrenville, Waukegan, Illinois.