When Denver bankruptcy lawyers file a bankruptcy petition, all assets belonging to the filer fall under the supervision of the court, which may deem it necessary to liquidate some of the assets to pay off creditors. As a result, a debtor's assets are classified either "exempt" or non-exempt".
Each state may define exempt assets differently. Denver bankruptcy lawyers can help you understand Colorado's definition but, generally speaking, the term means assets that cannot be seized by the court or by creditors. Even in a Chapter 7, or absolute bankruptcy, the court recognizes that you must retain some property to exist from day to day. Generally, "every day" things are exempt, such as your toothbrush, hair dryer, "ordinary" furniture (compared to exotic or antique furniture). Items of a personal nature or medically necessary are also usually considered exempt in all states such as walkers, crutches or wheelchairs.
Individual states can also set limits as to the amount of exempt property a filer may retain.
For example, the value of your clothing or jewelry is exempt up to a certain amount. The court is unlikely to seize your wedding ring unless it is extraordinarily valuable. Any assets over this set limit are subject to liquidation and the proceeds equally distributed among creditors as the court's discretion.Most states consider the following assets exempt:
Unpaid wages Some of the equity in a residence. Some of the equity in a vehicle. Life insurance value Tools of a trade or profession, usually up to a set limit Reasonable necessary clothing Reasonably necessary furniture Household appliances Jewelry, up to a set limit (usually a few hundred dollars) Pensions Public benefits
A sad truth is that by the time most people have reached the point of filing bankruptcy with Denver bankruptcy lawyers, their assets have dwindled to the point that the court considers them either exempt or worthless.
In the case that property has become worthless, the trustee assigned to the case may "abandon" the property, finding that it has no value and the debtor may keep it. Some property may be considered by the trustee to be too "cumbersome" to sell. This usually applies to something antiquated or else too odd to bring sizable market value. In this case, the trustee may also elect to abandon that property as well.