The general goal of filing for bankruptcy is to give you a fresh start financially. You clear your debts so that you’re not facing an overwhelming amount of monthly payments. You can then rebuild your credit score and continue earning to improve your financial future.
However, people are sometimes worried about filing for bankruptcy because they know they will have to liquidate assets. This is what’s done under Chapter 7 bankruptcy. Specifically, their concern is that they’ll have to sell the assets they use to make money.
Someone who works in the tech industry may be worried about losing computers and electronic devices, while someone who works as a handyman may be worried about losing power tools and hand tools. But the reality is that you can often keep these tools through a bankruptcy exemption known as the “tools of the trade.”
The focus is on your future
This exemption is provided because it would undermine the goal of bankruptcy if you lost the tools of your trade. It doesn’t matter if you’ve eliminated all of your debt if you now have no income. You’re just going to fall back into debt very quickly.
In order to focus on your future, this exemption can be used so that you keep the things that are necessary to your life and will promote future earnings. You generally just have to get rid of assets that are considered unnecessary or luxury goods –like a vacation property and expensive jewelry. However, you’re allowed to keep more basic items so that you can work toward the positive financial future that you want.
It’s important to understand how bankruptcy works and the steps you need to take as you move through this process. Having experienced legal guidance will help.