What Assets are at Risk When Filing for Bankruptcy

Both Chapter 7 and Chapter 13 bankruptcy have a significant impact on bankruptcy exemptions. In Chapter 7, exemptions help determine how much of your property you get to keep. In Chapter 13 bankruptcy, exemptions help keep your plan payments low. Learn more about these exemptions, and how they work.

What is considered exempt and what is not.

After bankruptcy proceedings, debtors can keep certain property. This is called “exempt” property — it is exempt from the estate.


Non-exempt property is the property that can’t be protected by the debtor. A debtor is generally allowed to exempt certain amounts of his or her property from bankruptcy. This can save most of the property of someone who is going through the process.


The “necessities” of modern life can be described as property that is exempt. These are items that are essential for daily living and work. Bankruptcy law is concerned about getting debtors out of crushing debt and putting them back on their feet. It recognizes that taking everything away from people is counterproductive. Items that are not essential for daily living or working are generally considered non-exempt property.


A general guideline has been established by court rulings and practice experience as to what property is exempt or not. Here are some examples of property that a Chapter 7 borrower will have to surrender (“non-exempt”) and property that they may keep the (“exempt”) property.

Chapter 7 asset exemption rules.

This is a liquidation bankruptcy in which the trustee sells your nonexempt assets to repay your creditors. Because the trustee cannot sell exempt property, exemptions can help protect your assets. Your state, for example, can allow you to keep one vehicle worth $5,000 or less.

Chapter 13 asset exemption rules.

Chapter 13 bankruptcy allows you the option to keep your assets and reorganize all of your debts, which can result in paying less. The amount you have to pay specific creditors will depend on the extent of exempt property. Credit card issuers, for example, are nonpriority unsecured creditors and must pay a sum equal to the value of your exempt assets. 


Exemptions for Chapter 13 can help keep your plan payments lower by reducing the amount that you have to pay creditors

Florida laws regarding bankruptcy and asset protection.

To start with, Florida exemptions are determined by where the debtor was domiciled for 730 days (2 years) immediately before the filing date. You have to have been a Florida resident for at least that period of time prior to filing to be eligible for exemptions.


Florida requires a “Means Test”, a complex formula to determine eligibility to file Chapter 7 bankruptcy. Debtors whose household income falls below their state’s median income and those whose principal business-related debts are above that income are exempt from this test. To file Chapter 7 bankruptcy, debtors whose household income is greater than the median income must pass a means test.

How do I decide on a bankruptcy attorney?

It can be a very complicated decision about deciding whether or not to file for Chapter 7. You should discuss if Chapter 7 is right for you with an expert on the subject. The process can be complicated if you try it yourself and making the wrong decision can be costly. 


John E. Mufson is a member of the Florida Bar, United States District Court for the Southern District of Florida, and the National Association of Consumer Bankruptcy Attorneys. He has over 25 years of experience providing Palm Beach County residents the best in legal advice.


John had filed over 2,000 bankruptcy cases in Florida. He is also a member of the National Association of Consumer Bankruptcy Attorneys. He is an expert in Chapter 7 and Chapter 13 bankruptcy codes. If you are looking for a bankruptcy attorney, you have found him. We have offices in Coconut Creek, Delray Beach, and Boynton Beach. Visit our site or call us at (561) 272-1003 day or night to arrange a free consultation.