Michigan residents may be like many across the country who are struggling at this time to make ends meet due to job loss, the closing of their businesses or unexpected medical expenses. For many, this may mean falling further and further behind on their bills and going deeper in debt just to survive. Seeking debt relief through bankruptcy is often a wise move, but some may feel confused about how state and federal bankruptcy exemptions may affect their situations.
With Chapter 7 bankruptcy, the court will typically use some of the applicant’s assets to repay part of the debt. However, this rarely means the court will leave an applicant with no home or vehicle, and certain other assets, such as work tools, are also exempt. If an applicant for bankruptcy owns only assets that are exempt, the creditors will simply get no payment from liquidation. While each state has its own rules for exempt and non-exempt property, some assets are commonly on the table for liquidation.
For example, someone who owns a second house or a summer home will likely have to sell that property. A second vehicle that is new or has some equity may be sold, and a bankruptcy trustee will likely sell or auction any musical instruments that the applicant does not need for a job. Valuable collections, expensive clothing, art and jewelry are generally not exempt from liquidation.
Those seeking Chapter 7 debt relief will complete an comprehensive list of assets, and a trustee usually does not search a home for hidden assets. Nevertheless, it is wise for those considering bankruptcy to obtain quality legal assistance as early as possible in the process to learn as much as possible about bankruptcy exemptions. A Michigan attorney can offer sound advice and guidance for obtaining relief from overwhelming debt and a chance for a fresh financial start.