When someone files for bankruptcy, they may believe that they’re going to lose everything. This is a very common misconception. In fact, some people even avoid filing for bankruptcy because they already don’t have enough money to make ends meet and they think they’re just going to lose the assets that they do own.
But the reality is that there are many different bankruptcy exemptions. These are set up to help people keep things that are important, such as homes, cars, jewelry, family heirlooms and much more. One area where exceptions are made is for the tools of the trade.
Protecting someone’s ability to earn a living
This exemption exists because the goal of bankruptcy is to allow someone to pay their bills. They still need to be able to earn a living after they file for bankruptcy. If filing for bankruptcy eliminated their debt but also took away all of their assets, there would be no point in filing to begin with.
But when someone can keep the tools of their trade, eliminating their debt is actually beneficial. They continue to make money, which they can put toward future costs. This gives them the fresh financial start that they were looking for.
Of course, the specific tools of the trade differ drastically from one profession to the next. A carpenter may need power tools, an office worker may need a computer and a musician may need their instruments. But this helps to demonstrate why it’s so important for those who are going through the bankruptcy process to understand what steps to take and what exemptions they can use. Contact a bankruptcy lawyer to learn what exemptions you may be entitled to.