What Do You Lose When You File Chapter 7 Bankruptcy?

It is important to note that the federal government will allow bankruptcy filers to keep $1,875 worth of jewelry because of the federal bankruptcy exemptions for personal property.

When you file for Chapter 7 bankruptcy, the courts will assign a bankruptcy trustee to your case. This trustee will oversee your bankruptcy estate. The estate will consist of properties the trustee will sell to make payments to your creditors.

You can exempt properties from the estate if the state you reside in determines that those properties are essential for your survival (i.e., you need them to live and work).

Thus, your state will likely consider your primary home and car exempt and will not include them in the estate.

Your trustee cannot sell items you own that have little to no value, such as junk cars or cheap pieces of clothing.

They cannot sell equipment you need for work, such as a laptop or printer, nor can they sell equipment you need for your well-being, such as health aids. Also, they cannot use your retirement accounts.

However, your trustee can sell properties called non-exempt assets. Such assets include items with significant resale value and no necessity, meaning you do not need them to maintain a base standard of living.

Check out this explanation of all the items you can lose when you file for Chapter 7 bankruptcy.

Non-Primary Residences

If you have homes that are not your primary residence, such as vacation homes, you can lose them when you file for chapter 7 bankruptcy.

When you have a substantial amount of equity on a second home, your trustee will include it in your bankruptcy estate.

The only way to keep your second home is if you reside in a state that will allow you to use what is called a wildcard exemption or if you can use a homestead exemption.

A wildcard exemption can vary from state to state. In Maine, it is $400. In California, it is over $30,000. If you live in a state that allows you to use this exemption for property that your other bankruptcy exemptions cannot cover, you can take advantage of it to keep your second home.

The homestead exemption can cover property your dependents use as a residence. For instance, if you own a second home and your former spouse and children live there, you may be able to keep it if you use this exemption.

It is worth noting that you can only use the homestead exemption if you do not need it to protect your primary home.

Valuable Collections

Many auction houses will accept stamp collections that are over $3,000 and coin collections that consist of old, rare coins. So it is likely that if you own a valuable collection, your trustee will sell it to pay down your debt.

Non-Essential Musical Instruments

Musical instruments can have high resale prices, especially if they were custom-made, passed down from generation to generation, or once owned by a celebrity.

If you own a high-value musical instrument and do not need it for your profession, you may lose it when you file for Chapter 7 bankruptcy.

Luxury Vehicles

Luxury vehicles are usually $40,000 and over, so it is no surprise that trustees often sell them when people for Chapter 7 bankruptcy.

Unless you can prove that the luxury vehicle you own is essential, that you use it for work or to conduct day-to-day activities, you will likely lose it during your bankruptcy case.


Many family heirlooms, such as an antique piece of furniture, a decades-old tea set, or a century-old clock, can be worth thousands of dollars. If you own any, your trustee may have them appraised and sell them to mitigate your debt.

Fine Art Pieces

Fine art pieces, such as paintings and statues, can be worth a great deal if a famous artist made them or if they are from a specific art period.

Your trustee is bound to sell any valuable art pieces you own since it will be hard to prove that they are essential for your survival or everyday living.

High-End Clothing & Accessories

Many designer clothes, shoes, and handbags can have high five or ten-year resale values, especially if they are in good to excellent condition.

Your designer clothes and accessories could go up for sale during your bankruptcy case. The chance that you will lose your items increases if they have little to no wear and tear.

You may be able to keep your high-end clothing and accessories if you can prove that they serve as tools needed for your profession.

For instance, you may work in an office where there is an expectation that everyone dresses in luxury goods to impress clients or appease executives.

Expensive Jewelry

Many households contain expensive jewelry, such as watches, rings, earrings, and necklaces. Pre-owned jewelry can have resale values of 20 to 50% of the initial price.

So if you spent $20,000 on a watch, you could resell it and receive $10,000. You may even be able to receive more money if it is a very rare or highly sought-after watch. Take all this into consideration when you file for Chapter 7 bankruptcy.

If you own expensive jewelry, the trustee for your case will likely sell them so that you can make payments to your creditors.

It is important to note that the federal government will allow bankruptcy filers to keep $1,875 worth of jewelry because of the federal bankruptcy exemptions for personal property.

In conclusion, you can lose several assets when you file for Chapter 7 bankruptcy. Therefore, you should research federal and state bankruptcy policies before you file.

Doing so will help you determine the assets you own that will be exempt and those that will be non-exempt.

Conducting research will also prevent you from being blindsided if the trustee assigned to your case sells one or more of your belongings.

Click here to learn more about the expectations, requirements, and processes that arise when you file for Chapter 7 bankruptcy and why you should obtain a bankruptcy lawyer.

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