An individual debtor is allowed by the Bankruptcy Code to protect some of his or her personal property from creditors’ claims. Under the federal or state bankruptcy law, a debtor can exempt certain assets.
Several states have made good use of the Bankruptcy Code’s provision that allows every state to implement its exemption laws instead of the federal exemptions. These states treat exemptions a lot like it did before the passage of the Bankruptcy Code in 2005. In Texas, for instance, you can select the bankruptcy exemptions that are most favorable to you – either your state’s exemption law or the federal exemption law. It is best to consult with a San Antonio Bankruptcy Attorney to find out what exemptions are applicable to your case.
The following are some of the main exemptions that an individual filing bankruptcy may avail under federal laws:
1. Homestead – You can exempt home equity on your primary residence. The amount of exemption varies in every state. In the State of Texas, the homestead exemption is unlimited.
2. Automobile – The maximum exemption is $3,225 of your equity on one vehicle. The equity in a car is determined by its market price, less the amount of loans against it.
3. Home Items – These include clothes, furniture, appliance and others. The maximum exemption is $10,775 for the overall amount and up to $525 for each item.
4. Heirlooms and Jewelry- $1,225 in value
5. Tools of the Trade – $1,850 in value
6. Life Insurance – This includes unmatured life plans and disability benefits.
7. Alimony and Child Support – The amount should be reasonable to support the debtor’s dependents.
8. Public Benefits – For example, public assistance, workers compensation, unemployment, Veteran’s benefits or Social Security.
9. Retirement Funds – The exemption is applicable to employee annuities, pension, Individual Retirement Accounts (IRAs), profit sharing and stock bonus plans, deferred compensation plans, and selected trusts. The new bankruptcy law broadened the protection for certain retirement plans that were always secured under the old law.
1. Pricey Musical Instruments (except if you are a professional musician)
2. Coin, Stamp, and Other Collections
3. Stocks, Bank Accounts, Bonds, Cash, and other types of investments
4. Second Vehicle
5. Second Home
Aside from Texas, the following states allow a debtor to pick either the state or federal exemptions: Arkansas, The District of Columbia, Connecticut, Massachusetts, Hawaii, Michigan, New Jersey, Minnesota, New Mexico, Rhode Island, Pennsylvania, Vermont, South Carolina, Wisconsin, and Washington. All the other states have chosen to use its laws which determine and list the bankruptcy exemptions.
When thinking about declaring bankruptcy under Chapter 7, the very first thing that people usually want to know is the property they get to keep if they file. The answer to this depends on the property you possess, the value of your property, and the exemptions that are applicable to your case. Discuss your situation with a San Antonio Bankruptcy Lawyer to figure out which set of exemptions is suitable for you.