What Are Bankruptcy Exemptions?

Bankruptcy exemptions determine what type of property you can keep when filing for bankruptcy. Every state has its own bankruptcy exemption laws that specify the types and amounts of property that you can keep. Items like your house, car, and household goods are generally protected and can’t be sold in order to pay off your debts. If an item is not protected or is worth more than what the state exemption will allow you may be forced to sell the item to pay off your debts.

In a Chapter 13 bankruptcy you are permitted to keep property that is worth more than what the state exemptions allow provided that you pay back your creditors the portion that is not exempt.