There are many misperceptions about bankruptcy that people worry about. To put your mind at ease, I like to explain to my clients how the process works.
When you file for bankruptcy, a “bankruptcy estate” is created. That means that in a broad sense you don’t potentially own anything anymore. Instead, your bankruptcy estate owns everything that you owned. However, in reality it works a bit differently. There are a series of state law exemptions that we use when we file a bankruptcy. If we exempt something from the bankruptcy estate, it means that it doesn’t become part of the bankruptcy and you get to keep it.