People file for bankruptcy to obtain a financial fresh start, but no one wants to lose all of their property in the process. In fact, a common and important question that clients or people considering bankruptcy ask is whether they will lose everything they own or a particular item if they file. In the majority of cases, our answer is, “No.”
That is because the law allows everyone who files for bankruptcy to protect certain property from their creditors, even if the value of their assets is greater than their debts. The bankruptcy laws state that certain personal items and real estate cannot be taken by creditors to pay off their debts.
Such items are exempt, or protected property.