Wednesday, October 5, 2016
What Is A Bankruptcy Exemption?
When you file bankruptcy you are allowed to list out certain pieces of property that are exempt from the trustee’s reach, in his or her efforts to locate an asset that can be used to pay some of your creditors. Each state has a list of property that is exempt, and the federal bankruptcy law also contains a list. Depending on whether you decide to go with the state or federal exemptions, a certain value in things you own will be untouchable by the bankruptcy trustee.
Common bankruptcy exemptions include a set value amount in things like:
• Your home.
• Your car.
• Your checking or savings account.
• Personal property such as clothing and jewelry.
The reason it is important to know what your exemptions are, and how they work is because if you have an asset that is worth more than the exemption you might be in danger of having the Trustee try to seize the asset and sell it for the equity. The Trustee would do this in an attempt to find an asset that is available to repayment of at least a portion of your debt, most times in a Chapter 7 because it is a Chapter 7 case where you are allowed to discharge all of your unsecured debt. But, if there are assets available to cover repayment of part of those unsecured obligations, the bankruptcy scheme is such that those assets will be used for that purpose. It is also possible to fall into a sticky situation if you have just recently moved to Rhode Island. Depending on the timing of your move and the state from which you moved from, you might have to opt for the exemptions allowed for in your prior state. This can be detrimental to your case if the value of the exemption in the prior state is less than what you would be entitled to after your move to RI. But this cuts both ways, and if the exemptions you are able to claim here are of a greater value you will want to time the filing of your case just right so you are sure to get the most out of your exemptions. It sounds confusing, and it certainly can be, but with the right bankruptcy attorney by your side you will get the information needed to make the right choice.
For more information about bankruptcy exemptions, call us today or reach us online at www.law-ri.com.