How To Obtain General Property Exemptions in Bankruptcy
The Trustee can sell your property to cover your debts if you file for a Chapter 7 bankruptcy.You need to pay as much as you can with your current assets if you want your debts to be forgiven.Certain property can be exempt by both states and the federal government.The Trustee can't sell exempt property.There is no exemption for general property.The federal government and states have created exemptions for your homestead and vehicle.Any property can be exempt from the card exemption.
Step 1: How much equity do you have in your home?
It is possible to exempt a certain amount of equity in your home.If you subtract the mortgage from the current market value, you can figure out your house's equity.If your house is worth more than you owe, you'll have equity.If you have equity in your home, the bankruptcy Trustee can take your house and sell it.You can protect it by applying a homestead exemption.You have no equity if the mortgage is worth more than the house.There is nothing the Trustee can do.
Step 2: Vehicles should be added to the list.
You can try to get rid of it.If the loan amount is greater than the resale value of the car, the Trustee will not take the vehicle.After paying off the loan, there is no equity in the car for the Trustee to use.You can find out the equity in your car by visiting the Kelley Blue Book website.The resale value can be found by typing in the make, model, year, and mileage of the car.The loan should be subtracted from the resale value.The car might have a resale value of $2,000.If you don't have a loan, you have $2,000 in equity.If you have a $500 loan remaining to be paid off, you will have over $1,000 in equity.
Step 3: Liquid assets should be identified.
Liquid assets include cash, stocks, and bonds.The Trustee can apply liquid assets to your debts if you declare for bankruptcy.Write down the current value of the property.If you have $255 in your checking account, you can cash it.The present value of savings bonds can be found on the website of the United States Treasury.The value of stock can be found by contacting a broker.
Step 4: There is a list of personal property.
You should look through your personal property as well.Start with large items, like computers, TVs, exercise equipment and furniture.List small items, such as books and kitchen supplies.During Chapter 7 you can usually keep clothing.If you want to value personal property, look online to see how much goods sell for.You can check the prices at thrift stores.Take a moment to write down the day and time you visited.You can have an appraisal done.If the value of your furnishings is low, you might want to use this option.It could raise eyebrows if you reported personal property of $3,000 when you have a million-dollar home.You want to have an appraisal done.
Step 5: You should read your state law.
Most states have created exemption schemes.To find out what exemptions are available, you should read your state law.The Internet can be used to find your state law.You can type "your state" and "bankruptcy exemptions" into your browser.Then look through the results.It is possible to stop into your nearest law library.Either the courthouse or your law school is where it should be.Tell the librarian that you are looking for exemptions.The library can help you find the information.
Step 6: Look for a homestead exemption.
If your state allows a homestead exemption, you should check it out.Most states do.Depending on the state, the amount will vary.You can only exempt up to $5,000 in your home in Kentucky, if you apply for bankruptcy as a married couple.You can exempt 70,200 dollars of equity in your home in Alaska.A homestead exemption is allowed by the federal government.It is worth $22,975 for single people and $45,950 for married couples who file together.If your home's equity surpasses the homestead exemption, you may have to apply other exemptions.The value of the exemption will be returned if the house is eventually sold.Check if you can apply homestead exemptions to other property.Your state could give you a $20,000 homestead exemption.If you only have $10,000 in equity you need to protect, you have leftover in an unused homestead exemption.Some states will allow you to apply the leftover homestead exemption to other property.
Step 7: Do you have a motor vehicle exemption?
There are exemptions for equity in motor vehicles in many states.To find out how much your state exempts, you should check.The amounts are vastly different.If you are disabled in Colorado, you can be exempt up to $10,000.Colorado married couples can double their exemption.You can exempt up to $15,000 in Nevada if you file with a spouse.You can exempt an unlimited amount of equity if you are disabled.An exemption of $3,675 can be granted by the federal government.
Step 8: There are other categorical exemptions.
Some states give exemptions for certain categories of goods, such as household furnishings.Cash is part of your bankruptcy estate.Some states have exemptions for cash that was paid in the form of wages.Retirement plans.Some retirement plans are protected by a categorical exemption.
Step 9: Find an exemption.
There is a "wildcard" exemption provided by some states and the federal government.You can apply this amount to any property you want.You can add it on top of your exemption.You could add an additional $2,000 to the exemption if your state allows it.You would be exempting $7,000 in equity in your motor vehicle.You can apply the exemption to any property that isn't covered by the categorical exemption.The exemption is for individuals and couples.If you are allowed to use any unused portion of your homestead exemption on your own property, that is essentially a wild card.
Step 10: You can find a bankruptcy lawyer.
If you want to file a bankruptcy petition, you should hire a lawyer.Your lawyer can help you decide if you should use federal or state exemptions.Depending on your state, you can choose between the federal exemptions or the state exemptions.You can't mix and match exemptions.You will have a better chance if you use a lawyer.A majority of people represented by a lawyer file for bankruptcy.The people who don't have a lawyer succeed only 61% of the time.If your state bar association runs a referral program, you can find a bankruptcy lawyer.
Step 11: Meet for a discussion.
The consultation should last 30 minutes.You can ask any questions at the consultation.Ask the lawyer if he charges a fee when you call for a consultation.Some lawyers give free consultations.Some people might charge a small fee.Paying the fee is something that you should think about.Sometimes free consultations are more about the lawyer trying to sell you his or her business.The lawyer might be more willing to answer your questions if you pay a fee.It is possible that you will represent yourself in the bankruptcy.You can use a half-hour consultation to get answers to your questions.You can file the petition on your own.
Step 12: You should apply your exemptions.
Schedules A and B are the forms you need to list all of your property.You will need to claim your exemptions on Schedule C.A brief description of the property's current value and exemption amount is required.