If some of your property exceeds the given exemptions you use when filing for bankruptcy, you will not necessarily lose that property to the bankruptcy estate. You do have the option of turning that property over to the bankruptcy trustee in charge of your case, but you have two alternative options as well. The first applies only to chapter 13 cases, and involves what’s called a liquidation analysis. This analysis is designed to give creditors what they would be entitled if the nonexempt property was liquidated through a chapter 7 bankruptcy. The creditors are eligible to receive the remainder of the liquidated assets after the trustee’s fees and other priority debts have already been settled. The second option can be done in chapter 7 cases, and it involves “buying back” the nonexempt portion of your property from the bankruptcy estate. For instance, if your car’s value exceeds the exemption value by $500, you would have the option to exempt all but the $500 and then arrange to pay the bankruptcy trustee the nonexempt $500. In most cases you should have the option to pay back this excess in smaller installments.
If you are considering filing for bankruptcy and are concerned or confused about what sort of property you can exempt, it would be to your advantage to set up a consultation with a local bankruptcy attorney.
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