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Consumer Bankruptcy- Exemptions and Priorities

Consumer bankruptcy is a debt relief option for those who are in debt, and cannot repay the debts for which they are liable.  Filing for bankruptcy can discharge or reduce these debts.


In a bankruptcy proceeding, exempted properties are property of the debtor which are beyond the reach of creditors or the bankruptcy trustees.  The Bankruptcy Code allows each individual who files for bankruptcy to keep basic assets which are considered necessary for the debtor’s “fresh start” after bankruptcy.  This property is the debtor’s “exempt property”. 

Generally, used household goods and personal belongings which have little resale value, pension rights and retirement plans are included in exempted property.  The point for maintaining the exempted property is to help the debtor to get a fresh start.  This is possible only if the debtor has something to start with.


Priority in bankruptcy proceedings refers to the order in which unsecured claims are paid from the money available in the bankruptcy estate.  The Bankruptcy Code establishes the order in which claims are to be paid from the bankruptcy estate.  All claims of a higher priority must be paid in full before claims with a lower priority receive anything.  All claims with the same priority are paid pro rata, meaning creditors share the available funds in proportion to the size of their claim.

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Bankruptcy is complex and with the new laws that went into effect more difficult to handle without an attorney. Talk to a Local Bankruptcy Attorney.

Inside Consumer Bankruptcy- Exemptions and Priorities