What You Can Keep After Filing for Bankruptcy


Many people believe that they will lose everything they own if they file for bankruptcy. Not true. In fact, most people who file for bankruptcy do not lose anything they own at all.

How can that be?

Well, the secret lies in…


Most consumers file for Chapter 7 (or “liquidation”) bankruptcy. In a Chapter 7, exemptions determine what property you get to keep. If your property is exempt, whether it is your home, your car, your pensions, furniture, your clothes, etc., you can keep it during and after the bankruptcy. Exemptions protect your property and put it beyond the reach of the bankruptcy trustee (“trustee”).

If the property is nonexempt, then the trustee is entitled to sell it to pay your unsecured creditors.

In a Chapter 13 bankruptcy, it is the exemptions that determine how much you will have to pay to nonpriority, unsecured creditors.

If you are considering bankruptcy in Oregon or Washington, it’s important for you to understand how exemptions work and to know what property is exempt in those states. We can help. We have offices in Tigard, Salem, Albany, Grants Pass, Klamath Falls, Bend, and several other cities in Oregon. We also have offices in Vancouver and Tri-Cities in Washington.

A Little More About Exemptions.

Every state has its own set of bankruptcy exemptions and most states require that you use the state exemptions only. However, some states allow a debtor to choose whether to use state exemptions or federal bankruptcy exemptions. Like all states, Oregon has its own set of bankruptcy exemptions. But in Oregon, if you file for bankruptcy you can elect to use the federal bankruptcy exemptions instead of the Oregon state exemptions. In Washington, you can use either the federal exemptions or the state exemptions.

How Exemptions Work.

There is a lot to know about exemptions, but briefly, this is how it works: if you have property that is worth a certain dollar amount that is equal to or less than the exemption, you will be allowed to keep the property. If, on the other hand, the property’s value exceeds the exemption, it is highly likely that the trustee will sell that property and use it to pay your unsecured creditors. Why? Because the federal government assumes that honest debtors try to pay off their debts. So, if a debtor has excessive property, the federal government believes it should be sold to pay those debts. On the other hand, the bankruptcy laws are designed to give debtors a “fresh start” —– not to leave them destitute. As a result of these dual concepts, both state and federal bankruptcy laws provide debtors with property exemptions.  Generally, Chapter 7 exemptions are far lower, stricter and are less flexible than Chapter 13 exemptions.

 We Can Guide You Through It.

If you are considering bankruptcy and want to know what property exemptions you would be entitled to, contact us. We have offices throughout Oregon and in Washington, and we offer free consultations.



What Are Bankruptcy Exemptions?

Our firm has bankruptcy law offices in many different cities throughout the state of Oregon, including Medford, Grants Pass, Coos Bay, Bend, and Portland. If you are filing for a Chapter 7 bankruptcy in the state of Oregon, you are required to surrender certain types of property to a bankruptcy trustee so it can be liquidated. However, in many cases, there is no property that can be liquidated, because many forms of property are exempt for bankruptcy purposes.


In Oregon, you have the option of using the federal exemption, or the state exemption. However, you cannot flit from one to the other depending on the piece of property that is in question. The most significant exemption involves your home or any real property that is eligible for a homestead exemption. Call us today do discuss which exemption law would best apply to your situation.


Personal property is exempt with rather modest limits. For example, as much as $1800 worth of clothing, jewelry, and other apparel items would be exempt. If you have a piano, some artwork, and/or a book collection, the exemption is $600. Furniture and other assorted household items are exempt with a limit of $3000. A single firearm would be completely exempt if it is not worth more than $1000.


Additionally, Social Security payouts, individual retirement accounts, and pensions are included under the exemption umbrella. Any money that you may have in a health savings account would be untouchable, and alimony payments and the tools of your trade would be exempt as well. In addition to the exemptions that we have itemized here, there are a number of others.


Now is the time for action if you have been thinking about filing for bankruptcy. As you can see, you are not necessarily forced to give up everything that is important you in return for a fresh financial start. If you would like to discuss your situation with a licensed bankruptcy attorney, call us at 1-800-682-9568 to set up a free, no obligation case evaluation.