Reba files a Chapter 7 petition in bankruptcy. She owns the following property: (1) an automobile valued at $2,800; (2) a homestead valued at $80,000, on which First Bank holds a mortgage of $60,000; (3) personal jewelry valued at $1,100; and (4) monthly disability payments of $1,000. Assuming Reba elects to use the exemptions listed in the Bankruptcy Code, what property may she keep?

Question

Quizplus · Accepted Answer

Under the Bankruptcy Code, individuals filing for Chapter 7 bankruptcy are allowed to keep certain exempt property. Disability payments are typically exempt as they are considered necessary for the debtor's support. The automobile, if under a certain value, can also be exempted. Personal jewelry up to a certain value is often exempt as well. The homestead exemption allows individuals to keep their primary residence up to a certain value, which in this case, after accounting for the mortgage, is under the exemption limit. Therefore, Reba can keep the disability payments, automobile, homestead, and jewelry.

Reba Files a Chapter 7 Petition in Bankruptcy