If you are considering filing for bankruptcy, you may be concerned that you are going to have to give up virtually all of your personal property. Luckily, this is not the case. You can keep some of your property thanks to Federal and state property exemptions. Property exemptions exist so that a debtor can have the basic necessities for living and earning a livelihood. Stripping someone of all their assets would make it nearly impossible for them to be successful in the future. In Chapter 7 bankruptcy, taking advantage of exemptions usually means that the property will not be sold to satisfy creditors. In Chapter 13 bankruptcy, the more exempt property you have the less you will have to pay creditors.
There are different types of property exemptions provided for by Federal and state law. Some exemptions apply to the specific property regardless of its value. Others apply to the entire value or part of the value of an asset. If property is totally exempt, the debtor can keep it and it is not considered by the bankruptcy court. If property is exempt only up to a certain amount and the value of the property is more than the exemption, the property may need to be sold by the bankruptcy trustee and the balance of the value considered part of the bankruptcy estate.
The Federal bankruptcy law provides exemption for the debtors homestead, personal property such as a car and household goods, personal injury awards and retirement accounts. All of this property can be exempt up to a certain amount. The wildcard exemption allows a debtor to choose any property as exempt property (up to a certain amount). When it comes to state property exemptions, it is important to realize that state bankruptcy laws are not uniform across the country. The state law that applies to a particular bankruptcy case depends upon the debtors domicile or state of residence. Depending upon the state of the debtors domicile, they may be entitled to Federal and state exemptions, or, one or the other.
Bankruptcy is a complicated area of the law and each case should be handled by a qualified attorney. Call us today to speak with a Schneiders & Associates, L.L.P. bankruptcy attorney who can provide you more information about whether bankruptcy is a good option for you.