The Rowdy G. Williams Law Firm, PC has the best helping hands available and are the experts when it comes to bankruptcy. Here are some answers and explanations from our Terre Haute bankruptcy attorney to common questions considering bankruptcy exemptions.
Bankruptcy Exemptions Explained
Your property becomes part of your bankruptcy estate when you file for relief. An exemption may help you protect your property from being sold off to repay debt, depending on the type of bankruptcy you file. You can exempt an asset like property in Chapter 7 bankruptcy, keeping it from the reach of debt collectors. If you file Chapter 13 bankruptcy, you may keep your exempt property but you must set up a repayment plan to your creditors, which can save you money.
Bankruptcy Exemption Basics
Bankruptcy exemptions vary federally and state to state, from protections for vehicles to family heirlooms. You can use a wildcard exemption to protect any type of property. In some instances, it’s all about the value of an asset and whether there are limitations on how much an exemption is worth. That would mean if you were only able to exempt part of the value of an asset, the trustee in a Chapter 7 bankruptcy could still sell your belonging but must pay you the exemption value from the proceeds, keeping the rest for debt owed. In other cases, you may be allowed to exempt the entirety of an asset regardless of the value.
Wildcard exemptions are used by debtors to cover any kind of property they want to keep and protect. These exemptions exist to help debtors when no other exemption exists to protect a particular asset and in cases in which a debtor would like to cover all the value of one of their assets when an existing exemption only covers part of the value. For example: If you want to keep your great aunt’s piano but your state doesn’t have an exemption specifically for musical instruments, you may be able to use a wildcard exemption to protect it from getting sold off by the Chapter 7 trustee. A Terre Haute bankruptcy exemptions attorney will be familiar with the exemption laws in your state. They can greatly assist you with wading through the values of your assets and determine if they qualify for an existing exemption or whether you should consider a wildcard exemption.
Federal Bankruptcy Exemptions
Federal bankruptcy laws outline certain exemptions that you can pursue in any state, unless your state opted out. Most states do not allow debtors to pursue federal bankruptcy exemptions. Federal Nonbankruptcy Exemptions
Nonbankruptcy exemptions lay outside the Bankruptcy Code and are extra exemptions debtors may pursue if they are not using their state’s exemption system. You must pick either federal bankruptcy or state bankruptcy exemptions as you are not allowed to use both. However, nonbankruptcy exemptions are mostly specialized and were created for debtors working in certain occupations.
Federal Bankruptcy Exemption v. State Bankruptcy System: Which is Best?
You may not have a choice on which system you use. As mentioned above, many states opt out of the federal bankruptcy system. If you have a choice, you must pick one system or the other. You cannot use both. Sometimes your years of residency within your state may also play a part in which system you can use. An experienced Terre Haute bankruptcy exemptions attorney like Rowdy G. Williams Law Firm, PC can help you make the best decision for your situation.
Can a Bankruptcy Exemption Protect My Home?
Yes. The homestead exemption can protect your home in bankruptcy and shield the equity in your home since it is considered an asset. For many debtors, the equity in their home is their most valuable asset in which case you will want it protected.
Can a Bankruptcy Exemption Protect My Car?
A motor vehicle exemption is provided by most states. This exemption will protect an amount of equity in your vehicle, though the amount may be limited meaning it will not cover the entire equity of your car. A qualified Terre Haute bankruptcy attorney may assist in this case, and can explain how you may use a wildcard exemption to pick up coverage the motor vehicle exemption misses. The amount of motor vehicle exemptions vary between states. Bankruptcy does not have to be a messy affair. With a little guidance and experienced assistance, you can keep your bankruptcy as clean as possible, minimizing your damages. Call a Terre Haute bankruptcy exemptions attorney at (812) 232-7400 or (317) 489-0310 to schedule a consultation.