Bankruptcy in Brief

a service of the Moran Law Group

Exemptions in Chapter 13.

In Chapter 13, the debtor selects exemptions just as in Chapter 7, although in the typical Chapter 13, the debtor keeps all of his property, exempt or not.

Exemptions in 13 are used to determine whether the plan complies with the requirement that a Chapter 13 plan must provide creditors at least the equivalent of what creditors would have gotten had the debtor filed Chapter 7 (the "best interest of creditors test").

Thus, to apply the test, the trustee calculates what property would be available for liquidation to pay creditors after the exemptions are deducted from the assets if the case were a Chapter 7.

Back to How Chapter 13 works