Michigan Bankruptcy Services Assist with Exempt Property

When a bankruptcy petition is filed, all assets belonging to the filer fall under the supervision of the bankruptcy court.  Sadly, part of the bankruptcy action may be to liquidate or surrender some assets to pay off the filer’s debt.  Assets are classified as either “exempt” or “non-exempt” by the Michigan bankruptcy services and bankruptcy court.

Exempt assets are defined differently from state to state but typically the term means assets that can’t be seized by creditors or the bankruptcy court. Even in a Chapter 7, or absolute bankruptcy, the court recognizes that you must retain some property to exist from day to day.   Generally, ‘every day” things are exempt, such as your hair dryer, toothbrush,  “ordinary” furniture (compared to exotic or antique furniture).  Items of a personal nature or medically essential are also usually considered exempt in all states such as walkers, crutches or wheelchairs.  Bankruptcy services in Michigan can help you determine which other assets may be classified as exempt.

Each state usually sets the limits on the amount of exempt property a filer can keep.  For instance, the value of your clothing or jewelry is exempt up to a certain number.  The court will not take your wedding ring unless it is viewed as extremely valuable.  Any assets over these limits are subject to liquidation and the equity spread among the creditors at the court’s discretion.

Most states consider the following assets exempt, as noted by Michigan bankruptcy services:

•    Unpaid wages
•    Some of the equity in a house.
•    Some of the equity in a vehicle.
•    Life insurance value
•    Tools of a trade or profession, usually up to a set limit
•    Reasonable essential clothing
•    Reasonably necessary furniture
•    Household appliances
•    Jewelry, up to a set limit (usually a few hundred dollars)
•    Pensions
•    Public benefits

By the time a person has reached the point of declaring bankruptcy, their assets have usually dwindled to the point that the court would view them as exempt or worthless.  In the case that property has become worthless, the trustee assigned to the bankruptcy file may abandon the property, finding that it has no value and the debtor may keep that property.  Some property may be believed by the trustee to be too “cumbersome” to sell.  This usually applies to something antiquated or else too odd to bring significant market value.  In this case, the trustee may also elect to abandon this property as well.

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