Even when in the direst of financial straits, you may be reluctant to file for Chapter 7 bankruptcy in Ohio. You may be afraid that you will need to forfeit everything you own in order to pay off your debt, leaving you with nothing.
In reality, this is almost certainly not the case. Believe it or not, bankruptcy exists for the debtors’ benefit. According to FindLaw, the purpose of bankruptcy, regardless of which chapter you file, is to help you get out from under crushing debt and start over financially. Therefore, selling off everything you own, leaving you with nothing with which to make a fresh start, would be counterproductive.
When you file Chapter 7 bankruptcy, an appointed trustee will hold some of your property in a bankruptcy estate, liquidating it as needed to raise the money needed to pay off the debt. However, some of your property is exempt, meaning that it is not part of the bankruptcy estate. The law exempts items necessary for living and working, i.e. “necessities of modern life.” Household appliances are exempt, as are tools of your trade. For example, if you have a computer you use for work and you need it in order to make money, the computer is exempt. Clothing, furnishings and household goods are exempt insofar as they are reasonably necessary. Some property, such as jewelry, automobiles, and home equity, are only exempt up to a certain value.
There are some types of property that are not exempt, and others that are only exempt under certain circumstances. For example, family heirlooms are not exempt, and musical instruments are typically not exempt unless you are a professional musician and the instrument is a tool of your trade.
The information in this article is not intended as legal advice but provided for educational purposes only.