If you are buried in debt, filing for bankruptcy protection can be a good way to get out from under it and make a fresh financial start. However, it is an aggressive solution that should not be made lightly. The fact is that debts can be discharged in bankruptcy, but you will also have to give up certain assets.
Thankfully, there are exemptions in place that protect certain things from being liquidated in the bankruptcy process. In other words, there are things you will be able to keep even when you file for Chapter 7 bankruptcy.
Exemptions vary from state to state, but if you file for bankruptcy in Iowa, the law dictates that you will be able to keep:
- Jewelry, including engagement and wedding rings, up to a certain value
- Household goods valued at up to $7,000
- Life insurance policies
- Health aids
- Pensions and retirement accounts
- Private libraries, photographs and paintings valued at no more than $1,000
- Your house, up to a certain acreage
- $7,000 value in a car or truck
These are just some examples of what you will be able to keep after filing for bankruptcy. For a complete list and additional details about valuations and limits, you can talk to your attorney.
It should also be noted that you could also be left with non-dischargeable debts. These are debts that do not qualify for discharge, and you will still be financially responsible for them. However, it should be easier to pay these down when other debts have been wiped out.
As you should see, you won't be left with nothing after bankruptcy. Nevertheless, it is a major financial decision that will have a significant impact on your life. Because of this, it is critical that you discuss bankruptcy and other debt relief options with an attorney before you make any decisions.