While preparing for Chapter 7 bankruptcy, you should bear in mind that some of your possessions may be exempted from liquidation. Both federal and Kentucky law provide for some possessions to be exempted from Chapter 7 liquidation, meaning a bankruptcy trustee cannot sell them off. So it helps to know before you proceed with bankruptcy which items you are likely to keep and which ones you are not.
Per FindLaw, there are certain possessions that in many cases will be classified as non-exempt. While the primary home of a person is usually considered exempt, a second home or a vacation residence typically is not. Similarly, bankruptcy filers can usually keep a primary vehicle but will probably have to sell a second car or truck. Valuable collections, such as stamp or coin collections, and family heirlooms are also likely to be sold off.
Valuable items that are used as a part of a job, however, stand a much greater chance of being exempted. For instance, a bankruptcy filer may own valuable musical instruments. Whether they can be saved from liquidation depends on whether the instruments are used to earn income. A person who is a professional musician is far likelier to hold on to one or more instruments than an individual who only plays music as a hobby.
You may still have a chance of saving an asset that is usually liquidated. Kentucky residents have the option of using a wildcard exemption to try to save such an asset. The state exemptions used by Kentucky also allow for tools of the trade to be exempted from liquidation. If you can have certain possessions designated as necessary for your job, they might be saved from being sold off. The assistance of a professional bankruptcy attorney can help you understand your options under state and federal law.
This article is written only to provide general information. Do not interpret it as legal advice.