When a debtor files for bankruptcy, decisions must be made regarding the assets held by the debtor. An asset which is secured by debt often must be returned to the creditor. In other cases, the debtor may reaffirm the debt and pay for the asset, either within a Chapter 13 plan or outside the bankruptcy. However, all reaffirmations must be confirmed by the bankruptcy judge, and restrictions apply to this process.
In a few cases, property may be exempt from bankruptcy proceedings. These exemptions are not always based on the Federal Bankruptcy Code; rather, each state lists property which is exempt from bankruptcy proceedings. Therefore, different property may be exempt in different states. It is important to consult an attorney licensed in your home state to determine what property is exempt from bankruptcy proceedings.
In an effort to make exemptions more uniform, the federal government has a standard list of exemptions that debtors can, in some cases, opt to use instead of the state exemptions. An attorney can explain your options and help you determine which set of exemptions should be used in your case.
One of the largest assets you own is your home. Because the law recognizes that those filing bankruptcy need a place to live, along with their families, the bankruptcy code and most state laws allow a "homestead exemption" on the family residence. This provides a certain amount (set by statute) that an individual can protect in their home's equity, thereby exempting it from bankruptcy proceedings. Some states also prohibit the eviction of a family from their residence in the event of a foreclosure or bankruptcy proceeding. Talk to a lawyer to discuss the possibility of homestead exemption in your state.
The bankruptcy code also allows a certain amount of exemption for your vehicle. The purpose of this part of the law is to ensure that a debtor is not left without means to go to work and travel to other necessary places. An attorney can explain the possibility of exempting some of your vehicle's value in your bankruptcy, or of reaffirming a debt in combination with exemption to help you keep your car.
Household goods and furnishings are also exempt, up to a certain amount, from bankruptcy proceedings. This allows debtors to retain their clothing, some household furniture and appliances, and basic yard-care equipment. There is a limit on the amount; any possessions over that amount are subject to repossession by creditors or liquidation by the bankruptcy trustee.
Retirement funds are also exempt in many cases from bankruptcy proceedings. There is a cap on the amount of funds which can be exempted, but in most cases the limit is quite high. Talk to a lawyer to protect your retirement investment if you are contemplating bankruptcy.
Legal Helpers can assist you in finding an attorney who will work with you to find solutions to your financial situation. Whether you decide to file bankruptcy or need advice on other options, Legal Helpers can refer you to the professionals who can answer your questions.
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By an Act of Congress and the President of the United States, we are a federal Debt Relief Agency. Attorneys and/or law firms promoted through this Web site are also federally designated Debt Relief Agencies. They help people file for relief under the U.S. Bankruptcy Code. Disclosures Required Under the U.S. Bankruptcy Code.
If you live in Alabama, Florida, Missouri, New York or Wyoming, please click here for additional information.
By an Act of Congress and the President of the United States, we are a federal Debt Relief Agency. Attorneys and/or law firms promoted through this Web site are also federally designated Debt Relief Agencies. They help people file for relief under the U.S. Bankruptcy Code. Disclosures Required Under the U.S. Bankruptcy Code.