The good news is that you have more than one option when you file for bankruptcy and discover that your equity and assets are “over-exempt”. An “over-exempt” status occurs when your assets – not including your IRA and your home – are worth more than the exempted amount. Some examples include cash, furniture, tax refunds and your car.
In Maryland, you’re allowed to keep approximately $12,000.00 of assets, not including your IRA and your home. If the equity in your assets is worth more than $12,000.00, you would need to pay an agreed-upon amount to the trustee in bankruptcy. The payment required might be so high that you are forced to file a Chapter 13 case and to buy back that equity from your creditors. In some cases, it is worth staying in Chapter 7 even if you’re many thousand dollars over your exemptions.
For more information, read Over Exemptions? Pay Cash to the Trustee and Sleep Better
