Utilize Bankruptcy Exemptions
You can keep certain assets protected in bankruptcy by utilizing bankruptcy exemptions. This includes a car, professional tools, and clothing. You don’t need to worry about an asset being exempted by the bankruptcy trustee assigned to your case. They can take it and sell it for your creditors’ benefit.
There are many exemptions that protect certain property types such as furniture or motor vehicles up to a specific dollar amount. Sometimes, an exemption covers the entire asset’s value. You can apply some exemptions called ” wildcard exemptions” to any property that you own.
My Collectibles? Jewelry? Pets?
It’s not about removing all your possessions. The goal of filing for bankruptcy is to make you new. You will likely be able to protect the essentials, as well as other items, such as religious texts, a place in a house or church, and a burial plot. Some states exempt feed and chickens. However, you should not assume everything will be fine.
- Luxurious items. There are no exemptions for yachts, collections, or expensive artwork. These valuable assets are often sold by their owners to pay off debt rather than filing for bankruptcy.
- Jewelry. Some states have laws that protect wedding rings up until a certain dollar amount. Don’t count on keeping an antique broach, a Rolex, or a diamond necklace.
- Pets. Your dog or cat that you rescued from the shelter will probably be safe from the trustee’s grasps. Why? This is not because you won’t have an exemption to protect it. It’s more that it would cost the trustee more to sell it than it would be worth. However, if you have a show dog or racehorse with high breeding fees, it might be necessary to either turn it over or pay for it in bankruptcy.
What Are Exemptions?
There are different exemptions depending on whether you file a Chapter 7 bankruptcy or a Chapter 13 bankruptcy.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy is a liquidation bankruptcy in which the trustee sells your nonexempt assets to repay your creditors. Because the bankruptcy trustee cannot sell exempt property, exemptions can help protect your assets during Chapter 7 bankruptcy. If your state provides a $5,000 exemption for motor vehicles and you have a $4,000 car, you can keep it. For more information, please see Exemptions for Chapter 7 Bankruptcy.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy allows you the option to keep your assets and to reorganize your debts. This can result in paying less for some creditors. The amount you have to pay specific creditors will depend on the extent of exempt property. Credit card issuers and other nonpriority unsecured creditors must be paid an amount equal to the value of your exempt assets. Exemptions in Chapter 13 bankruptcy help to keep your plan payments affordable by reducing the amount that you have to pay creditors. For more information, please see Exemptions for Chapter 13 Bankruptcy.
Federal And State Bankruptcy Exemptions
Each state has its own set of bankruptcy exclusions. Federal law also provides an exemption set. The Federal Bankruptcy Exemptions. You can choose to use state exemptions, while others allow you to choose the federal system.
The “domicile requirements” determine which state’s exemption laws will be applicable to you. Exemptions are available in bankruptcy for more information on the differences between federal and state exemptions, and what domicile requirements you must meet. We recommend a bankruptcy overview with your attorney.
Federal Nonbankruptcy Exemptions
There are a number of federal exemptions available under nonbankruptcy law that go beyond the state and federal bankruptcy exemptions. These exemptions work in the same way as bankruptcy exemptions to protect your assets in bankruptcy. Federal nonbankruptcy exclusions are only available if your state has exemptions. You cannot combine the nonbankruptcy and federal bankruptcy exemptions. You can also use nonbankruptcy exempts if you are using state exemptions.
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Bruner Wright is the top-rated experienced bankruptcy lawyer in South Georgia and the Florida Panhandle. Our team has more than 30 years of experience helping people file Chapter 7 bankruptcy. Chapter 11 bankruptcy. Chapter 12 bankruptcy. Chapter 13 bankruptcy. Our practice has been very successful in helping people discharge their debts. We offer a personal service that is comprehensive and thorough in all aspects of our industry. We are responsive to the needs of our clients.
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Contact us today to schedule a consultation with a Bankruptcy Attorney In Augusta Ga. Find out if bankruptcy is the best option. A member of our team will review your case to help you make the right choice. We are focused on consumer bankruptcy. We want you to achieve financial stability.