Doubling Exemptions: What Is It And Can You Do It?
When you are married and filing a joint bankruptcy, there are certain perks that you can receive. One of those is a double exemption. Before you can use a double exemption, it is important that you understand what it is and what circumstances have to be present to use it.
What Is an Exemption?
When you file for a bankruptcy, you must list all of your assets. The bankruptcy trustee will assess the value of your assets and decide whether or not to take possession of them to sell off to pay your creditors.
The idea of a bankruptcy is to give you a clean financial slate. Taking all of your possessions will not help you get the start you need, so the government allows you to retain some of your assets with the help of an exemption. The exemption allows you to keep some of your assets as long as they do not exceed a certain dollar amount. The amount of the exemption varies by state, so check with your bankruptcy attorney to find out what yours would be. Some exemptions are designed to protect specific assets. For instance, your state most likely has a homestead exemption. This would help you protect your home from being seized by the trustee in some situations.
Some states have wildcard exemptions that allow you to use the amount on anything. For instance, if your state has a wildcard exemption of $15,000, you could use it to save assets, such as jewelry, artwork, or other valuable items that total up to the $15,000 allowed.
What Is Doubling Exemptions?
Doubling exemptions is exactly as it sounds. You and your spouse can each receive exemptions, combine them, and use them to protect your assets. For instance, if you and your spouse both have a $15,000 exemption, you can combine it to have a total of $30,000. It could be used to save your home, car, or other asset. There are rules to doubling your exemptions though. Some states only allow doubling exemptions on assets that are jointly owned.
Doubling is also only an exemption if you live in a state that allows you to take the federal exemption, too. If your state does not allow you to take the federal exemption, there is a chance you can still double. Some states who do not allow federal exemptions allow you to double under their exemption system.
There are many other rules to doubling of which you and your spouse should be aware before trying it. Talk to a bankruptcy attorney like Thomas A Blake to learn what you need to know and how it applies to your situation.