Bankruptcy Exemptions 101 | A Filer’s Guide To Understanding

Facing the legal process of filing bankruptcy can be one of the scariest places to be in life. You will be looking at the possibility of your hard-earned property being repossessed or sold to help cover the costs of what you owe. As bad as bankruptcy may seem at first glance, you should know that for most filers it is not a bad as what they expect. There are some exemptions to bankruptcy that will help you maintain the rights to at least some of your personal property. Here are a few of the most common questions about bankruptcy exemptions. 

Will you be allowed to keep your furniture and household belongings?

There is an exemption of more than $11,000 for household furnishings when you file bankruptcy. This, of course, will not include items that you have financed and will be filing on. Any item valued at more than $550 dollars could possibly be sold by a trustee to help repay your debts. However, the resale value of most household furnishing is so depreciated that in many cases you will get to keep more than your exemption allows in the end. 

Can the bankruptcy court make you sell an expensive pet?

In law, pets are deemed as personal property, so technically speaking, in most states you could be forced to sell expensive pets or livestock during a bankruptcy. However, most states have what is commonly referred to as a wildcard exemption, which would cover your pets. 

What will happen with your 401k or retirement plan?

Retirement plans are not looked at as part of the bankruptcy proceeding, and therefore, you will be able to keep your retirement savings. The monies that you hold in 401k plans, stocks, and IRAs will be exempt to an extent. 

How should exemptions be handled as the bankruptcy filer?

If you have exemptions that you want to submit to the court, you should make a detailed list when you initially file for bankruptcy. Your chosen attorney can help you create this list and understand more about what will or will not be exempt.

When it comes down to it, the exemption laws that are in place when it comes to filing bankruptcy can be a ray of hope in a situation you thought would be utterly disarming. If you have additional questions about bankruptcy exemptions, talk to your attorney for more information.  For more information, go to http://timgeorgelaw.com.