Concerns about asset liquidation are common during Chapter 7 bankruptcy. Asset liquidation is sometimes necessary during Chapter 7 proceedings, which can deter those in need of financial relief from filing.
Before the courts discharge the balances due on their eligible unsecured debts, the trustee may first oversee the liquidation of specific resources to repay creditors. Those filing Chapter 7 bankruptcy must make thorough disclosures of their assets to determine if liquidation is necessary.
Concerns about protecting specific assets are common in the early stages of Chapter 7 bankruptcy. People often worry about their vehicles, as they need their own transportation to retain their jobs and meet the needs of their families. Thankfully, Mississippi state statutes include exemptions that can protect accrued equity in a personal vehicle during Chapter 7 bankruptcy proceedings.
How much can filers protect?
Bankruptcy exemptions allow filers to protect specific assets or the equity accrued in them. There are two distinct sets of bankruptcy exemptions enshrined in law. There are federal exemptions and then also exemptions established under Mississippi state statutes. Mississippi is an opt-out state, which means that filers only have the option of using state exemptions to protect their assets from liquidation.
The tangible personal property exemption applies to cash, vehicles, household goods, clothing, books, animals, crops, trade-related tools, health aids and any other tangible personal assets worth less than $200 each.
Vehicle equity represents the fair market value of a vehicle adjusted for any outstanding debt attached to the vehicle. Individual filers can exempt up to $10,000 in all the assets included under that category. In cases where married couples file jointly, the exemption doubles to allow for the protection of up to $20,000 of accumulated vehicle equity.
People with financed vehicles and those with older vehicles may have low enough vehicle equity to fully bypass liquidation requirements. If those considering a Chapter 7 bankruptcy have more vehicle equity than they can protect, they may be subject to liquidation efforts that affect what they owe on their vehicles.
Reviewing personal resources with a skilled legal teamcan help those considering a Chapter 7 bankruptcy optimize their use of state exemptions and protect their most valuable resources. Vehicle equity is a common concern, but many people can fully protect their vehicles with the right documentation.