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Affiliated Attorneys, LLC Blog

Monday, March 27, 2017

Five Assets That Won’t Be Taken by the Bankruptcy Court

When a person files for bankruptcy protection, his or her assets must be collected by the bankruptcy trustee and liquidated to reimburse debtors before the petitioner’s debts can be discharged. In order to keep bankruptcy petitioners from falling below the poverty line, there are certain assets that can be retained as exempt. This is not an exhaustive list, but covers the most commonly used federal bankruptcy exemptions.

1. Homestead exemption: If a bankruptcy petitioner owns a home, he or she may protect up to $22,975.00 worth of equity in the home. If the home does not have $22,975.00 worth of equity, a bankruptcy petitioner may only claim as exempt the amount of equity available to claim. Those petitioners who do not own homes do not have the benefit of claiming the homestead exemption. Some states allow petitioners to exempt the entire value of his or her home’s equity, no matter how large.

2. Vehicle exemption: Throughout much of the country, it is difficult to work or earn money without an automobile. Federal law allows a person to keep his or her automobile with a value up to $3,675. If the car is worth more than the amount allowed by the exemption, an individual may seek additional funds from other exemptions to keep the asset. Alternatively, the vehicle will be sold and the exemption amount given to the petitioner.

3. Personal property exemptions: These include $1,550.00 for jewelry, $2,300.00 for specialized tools and educational materials related to employment, and $12,250.00 for household goods, appliances, furnishings, clothing, etc.

4. Personal Injury exemption: The proceeds of a personal injury award may be held as exempt up to $22,975.00.

5. Wildcard exemption: A person is permitted to exempt as much as $1,225.00 for any other property he or she wants to keep after the bankruptcy above the other exemptions. This can be applied to increase the amount permissible to another exemption, most commonly the vehicle exemption. If the petitioner so chooses, he or she may opt to use the exemption on liquid assets, leaving the petitioner with more cash on hand after the bankruptcy is complete.

States may make other exemptions available or use different values than the federal exemptions. Nineteen states and the District of Columbia allow petitioners to use these exemptions.


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Serving Southeastern Wisconsin, with offices in Milwaukee and West Bend, Affliated Attorneys, LLC represent clients throughout Milwaukee County, Washington County, Waukesha County, Dodge County, Ozaukee County, Racine County, Sheboygan County, Jefferson County, Fond du Lac County and Walworth County.



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