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Many assets exempt from forfeiture during consumer bankruptcy

Being unable to repay debt while creditors are constantly calling can cause serious emotional turmoil for consumers, but for some, the possible solution can be similarly distressing. When it becomes otherwise necessary to file for consumer bankruptcy in Washington, it is common to have serious concerns regarding personal property. One of the biggest fears consumers face when seeking bankruptcy protection is the loss of their most important assets.

This concern tends to be most common with Chapter 7 filings, in which most or all of a filer's debt is discharged. While it is true that assets must sometimes be liquidated in order to satisfy certain debts, there are both non-exempt and exempt properties. Non-exempt assets that must be forfeited can cover a wide range of items, from seemingly lavish to those that hold more sentimental value than monetary. Second homes or vehicles are commonly not exempt from forfeiture, and neither are family heirlooms or stamp and coin collections. Unless the filer works as a professional musician, he or she must also relinquish any musical instruments that have significant value.

Exempt property is also exceptionally varied. Filers can usually hang on to their primary vehicles and their household goods. Pensions are also off limits when it comes to forfeiting property, as are wages that have been earned but not yet paid, such as upcoming paychecks. Certain values of jewelry, household appliances, unemployment compensation and Social Security benefits are also exempt from forfeiture during bankruptcy.

Forfeiting property during consumer bankruptcy might not appear to necessarily be an easy task, but many people in Washington find that most of their property is exempt. Even when this is not the case, consumer bankruptcy can still be a smart choice. When debt becomes insurmountable and it is impossible to make even the minimum payments, creating a fresh financial start can be paramount for future success.

Source: FindLaw, "Exempt vs. Non-exempt Property Under Chapter 7", Accessed on Aug. 28, 2016

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