The fear of losing property stops many people from exploring their options in bankruptcy. The fact is that only four percent of chapter 7 bankruptcy cases are “asset cases,” meaning the bankruptcy trustee receives money or an asset from the debtor. For the other 96% of chapter 7 cases, the debtor continues to pay secured debts, like a house or car, and is able to keep the property.
Determining whether a debtor has an asset case is a simple arithmetic calculation using bankruptcy law exemptions. Bankruptcy exemptions are provided by state law. Every state grants exemptions so that the debtor can retain property, like home equity, a modest vehicle, some personal property, and household furnishings.
The homestead equity exemption can vary greatly from state to state. Some states grant an unlimited homestead exemption to their residents (which the federal law may limit in some circumstances), and other states do not offer much protection. Ohio, for instance, only provides a $5,000 exemption, while Kansas gives its residents an unlimited exemption.
The motor vehicle exemption generally allows the debtor to exempt equity in one (sometimes more) personal vehicle. The exemption can vary greatly by state, usually ranging from $2,000 to $10,000.
Every state grants an exemption for basic household furniture. In addition, most states give an exemption for tools used for work, musical instruments, etc.
Many states provide a wild card exemption to exempt miscellaneous items. This wild card exemption can be used to protect otherwise non-exempt equity in a vehicle or home. Generally it is used to protect cash money in the bank.
Identifying your property, determining its value, and applying your exemptions is the difference between retaining and losing property in a bankruptcy case. An experienced bankruptcy attorney can guide you through this process.
Contact Freedom Law Firm today for a free consultation at 702-745-8327.