Assets can determine which chapter is best. While a debtor may qualify for Chapter 7, they may own assets they cannot fully protect from seizure by the bankruptcy estate. Assets that cannot be fully exempt must either be paid for (up to the value that is non-exempt) or surrendered to the bankruptcy estate.

The court requires that you list all of your possessions, which can range from furniture to your car. You must list a replacement value for every asset to give the courts an idea of what your assets are worth. An example of this would be listing the value of your car found on a website like NADA or Kelley Blue Book.

Upon listing the items and the replacement value, you then need to look at your exemptions and see what can be protected. Every state has a list of exemptions and you will normally use the exemptions from the state that is your residence.

If you find that your property cannot be fully exempted because it is worth too much, you will have a decision to make. Most trustees require buying back non-exempt property or else surrender the property. If you are in a Chapter 7, the asset will have to bought back by the debtor within a short period of time that can range anywhere from three months to a year. This can be difficult if the value of the asset is high. In those instances, filing a Chapter 13 might be easier to handle. The payoff period in a Chapter 13 is normally 3-5 years.

If you don’t have any assets or your exemptions are sufficient to protect your property, then Chapter 7 is the best option you.