Exempt property laws vary by state, but typically include a person's principal residence, motor vehicles (including motorcycles), household furnishings, clothing, jewelry, life insurance policies, retirement accounts and pensions, bank accounts, social security benefits, disability benefits, spousal and child support, etc.
A particular property's exemption amount may be unlimited or limited to a certain financial amount. For instance, an unlimited exemption may specify that all apparel is exempt. A limited exemption may exempt up to $3,000 worth of jewelry.
Technically, any non-exempt property can be sold by the bankruptcy trustee to pay creditors. In reality, however, bankruptcy trustees are typically uninterested in liquidating non-exempt assets with negligible value, such as a $600 automobile or common domestic items.
In roughly 96% of consumer bankruptcy cases, all assets are exempt. Therefore, the debtor retains all assets, and creditors receive no payment. All or nearly all debts are canceled or """"discharged."" If the debtor owes money on his home or automobile and wants to retain these assets, he must """"reaffirm"""" these debts and continue making regular payments, or he must pay the creditor the property's fair market value.
Periodically, bankruptcy exemption laws are amended, so it is essential to review the most recent exemption laws to determine which assets are exempt in your state when you file for bankruptcy.""
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