One of the biggest misconceptions about bankruptcy is that you'll lose everything you own. But that’s not true. When you file for Chapter 7 bankruptcy, the court lets you keep some types of property up to a certain value.
Written by Attorney Jonathan Petts.
Updated January 26, 2022
It's a common misconception that filing for bankruptcy means you'll lose everything. But this isn't true. When you file for Chapter 7 bankruptcy, the court lets you keep your property up to a certain amount. Most people who own less than $10,000 in property can keep it all. If you’re filing for Chapter 7 bankruptcy and you don't have a home, you should feel comfortable knowing that most people in your situation get to keep all of their property. In most cases, the bankruptcy court won't try to seize your clothes, furniture, or other household items.
It gets a bit more complicated if you own over $10,000 in property or unusually valuable items. In this case, what you get to keep depends on your state and the type of property you own. Each state has special exemption laws that allow bankruptcy filers to keep different amounts of different kinds of property.
If you aren't sure about how your state's exemptions apply to your case, you can contact a bankruptcy attorney to get legal advice.