Exemptions in Chapter 7 Bankruptcy: What Can You Keep?

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How Does Chapter 7 Bankruptcy Work in West Virginia?

Bankruptcy is a legal option that allows debtors to get back on their feet and regain control of their financial situation while resolving their debts. Chapter 7 bankruptcy lets you settle most of your unsecured debt by having a trustee sell all your non-exempt assets to settle your creditors.

Exemptions are crucial in Chapter 7 filings, as the more property is exempted, the more you can retain after bankruptcy. Before filing for bankruptcy, consult skilled West Virginia bankruptcy lawyers for legal counsel on the exemptions and what to expect throughout the process.

Why Are Chapter 7 Bankruptcy Exemptions Important?

The set of exemptions in Chapter 7 bankruptcy enables you to maintain your quality of life after filing for bankruptcy. Once you file for bankruptcy, you are subjected to the Means Test, which determines the property the court will exempt.

The next step is to claim exemptions provided by West Virginia law to safeguard your assets from being sold by the trustee assigned to your case. Assets exempted in Chapter 7 bankruptcy have a limit, meaning you can protect specific property types up to a certain amount.

If you carefully apply all the exemptions provided by law, the chances are high that very few of your assets will be sold during bankruptcy. Working with reputable Chapter 7 bankruptcy attorneys in Martinsburg can help you get the process right and avoid the pitfalls that could subject your property to being sold.

What Are Chapter 7 Bankruptcy Exemptions in West Virginia?

West Virginia does not allow bankruptcy filers to claim federal bankruptcy exemptions like in other states. You’ll only need to consider state exemptions and federal non-bankruptcy exemptions applicable to your assets. However, if you relocated to West Virginia less than two years ago, you may need to refer to your former state’s laws on exempt property.

The following are Chapter 7 bankruptcy exemptions in West Virginia:

Personal Property

While you can safeguard certain kinds of personal property when filing for Chapter 7 bankruptcy, West Virginia places a cap on the value subject to exemption under every category of personal property with the following as examples:

  • Jewelry held for personal or family use, up to $1,000
  • Health aids as long as they have been prescribed by a professional
  • Motor vehicle equity per single car, up to $2,400
  • Tools of trade used in your profession or that of your dependent, up to $1,500

The following items under the category of personal property may also be exempted up to $400 per item or up to $8,000 in total:

  • Appliances
  • Animals
  • Books
  • Crops
  • Clothing
  • Household goods and furnishings
  • Musical instruments

Chapter 7 bankruptcy lawyers in West Virginia explain that if you’re filing for bankruptcy jointly as a married couple, the law allows you to enjoy the benefit of the “doubling rule.” That implies that you can separately claim a complete set of exemptions, which doubles the exemption values available to people filing as unmarried individuals.

Real Property or Homestead Exemption

You can be exempted up to $25,000 of the equity of the home where you live and up to $50,000 if you’re married and file for joint bankruptcy. If you’re a physician filing for bankruptcy due to a debt arising from a medical malpractice claim, you could be allowed to protect up to $250,000 of your home equity if you carry at least $1 million in malpractice insurance.

Homestead exemption may apply to the equity you hold in any real or personal property, for example, a house, burial plot, or condo. Let experienced attorneys guide you to ensure you capture everything the law allows you to list.

Money-Related Exemptions

If you file for Chapter 7 bankruptcy in West Virginia, you are entitled to the exemption of various monetary assets in their total value. These include the following:

  • Insurance proceeds
  • Public benefits such as Social Security, unemployment, workers’ compensation, general assistance, veterans’, or crime victim’s compensation
  • Retirement accounts
  • Disability benefits
  • Child support
  • Alimony or spousal support
  • Personal injury awards
  • Wrongful death awards
  • Property of a business partnership
  • Lost earnings payments received for support

Stock bonuses, pensions, profit-sharing plans, and contracts tied to age or illness may also be exempted if the payments are reasonably necessary for support.

Wildcard Exemption

The wildcard exemption is for anyone who files for any type of bankruptcy. It protects crucial assets that don’t necessarily fit into one of the above categories, such as artwork, collectibles, family heirlooms, or wedding dresses. Typically, this exemption can also be added to the exemption limit of the other categories.

For example, if the equity of your car is above the exemption limit in West Virginia, you could add the wildcard exemption to protect the car’s value above the exemption limit to prevent it from being sold. Consult skilled Chapter 7 bankruptcy attorneys in Martinsburg for guidance on how this exemption works to maximize its benefit.

A Skilled Bankruptcy Attorney Helping You Protect Yourself

If you’re considering filing for Chapter 7 bankruptcy, you could be worried that you might lose everything you own. Fortunately, the law in West Virginia provides a list of exemptions that can protect most of your assets so that the quality of your life doesn’t diminish. Bankruptcy lawyers in West Virginia can explain how the exemptions work and how to claim them.

At Hinkle Family Law, PLLC, we strive to help clients find financial freedom. We can evaluate your situation and advise if bankruptcy is best for you. Our knowledgeable Chapter 7 bankruptcy attorneys can also help you explore other alternatives to settle what you owe. Call us at (304) 944-0571 to schedule a FREE consultation.

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