One of the biggest myths about Chapter 7 bankruptcy law is that the process will leave you with nothing. America's system appreciates that people still have lives to live after they complete Chapter 7. However, it is still important to understand what you may or may not retain in terms of assets once you're done.
A critical part of keeping anything in Chapter 7 bankruptcy law is what is known as exemptions. When you petition the court for relief, you have the right to ask the judge to exempt specific assets. Generally, exemptions favor things that serve some practical purpose. For example, you might ask the court to exempt your car because you need it to get to and from work.
Some states allow more exemptions. Usually, they use what's called a wildcard. In wild card states, petitioners can exempt assets up to a particular value. This is usually several thousand dollars. Whatever you can cram in terms of value under that level is likely to be exempted.
Notably, this is a cumulative total. For example, you can't claim 5 different things that are $2,000 if your state offers wildcard exemptions. However, you could keep 5 items worth $400, summing to $2,000.
Also, never assume what exemptions a state does or doesn't offer. Contact an attorney and find out what the limits are.
One case where you won't keep items is if they secure any debts. A debt is secured when a piece of real property supports it. When someone has a car loan, for example, the vehicle secures the debt. Consequently, the creditor has every right to repossess the car.
While the judge has the final say on exemptions, the trustee is who largely assesses these choices. The trustee has a duty to recover value for creditors, but they also can't render you destitute. A trustee also is responsible for making recommendations to the court, and they will deal with day-to-day issues related to selling items from the bankrupt petitioner.
If there is anything worth selling, the trustee will make arrangements to sell items. When there's a good enough pile to sell, the trustee can even set up an auction or brokered sales.
Some items may not be sellable, or they may require too much effort. When this happens, the trustee has the right to pass on selling them and just give them to the debtor. This idea largely applies to personal bankruptcies, not business ones.
For more information, contact a Chapter 7 bankruptcy law service.