How can I keep property that I cannot exempt?

Exemptions are powerful property allowances that permit many debtors to keep most or all of their property in bankruptcy. However, some exemptions are limited in dollar value and cannot completely protect property from bankruptcy. Fortunately, there are options. Chapter 13 bankruptcy allows debtors to keep their property, paying an amount equal to the non-exempt value of their property over up to 5 years. In some cases, the plan will already require a greater payment amount and keeping the property will add no extra cost.

In chapter 7 bankruptcy, the options to keep the non-exempt property are more limited. If the debtor has a source of money that is exempt or otherwise not property of the estate, such as exempt earnings or a family contribution, it may be possible to negotiate with the bankruptcy trustee to purchase the non-exempt property back from the estate. This is often more efficient than selling the property to the public. However, there is no guarantee of success in keeping the property and it may become a costly process to compete with other prospective purchasers.

When considering if exemptions are adequate to protect property, two other considerations are at play. One, the value to be protected by an exemption is only the net value of the asset after subtracting any money owed on the property (e.g. the balance on a car loan). If the net value can be exempted, the debtor can keep the property as long as the secured creditor (e.g. the car lender) is paid or otherwise properly treated. For more about that topic, please see Can I keep my car in bankruptcy? Additionally, property of inconsequential value or that would be unduly burdensome to sell may be abandoned by the trustee back to the debtor.

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