If you are filing for bankruptcy under Chapter 7 law, know that you don't have to liquidate all your assets. There are things that you can exempt from your bankruptcy so that you can keep it. Here is what you need to know about exemptions.
State Laws Are Different
The first thing to know is that bankruptcy laws are different in every state. While the entire value of a home may be exempt in one state, it may not be exempt in another. That's why it is always worth working with a bankruptcy lawyer so they can make sure you are doing everything properly based on the laws where you live.
Home Exemptions Have Limitations
If you own a home, you'll want to know how much of your home's equity will be exempt if you need to sell it. For example, if you have a $200,000 home with $150,000 left on your mortgage, then you have $50,000 of equity in your home that you've built up over the years. If your state only has a homeowner exemption of $30,000, you would sell your home and get a check for $30,000. However, if your $200,000 home only has $15,000 in equity, you would only be able to receive $15,000 from the sale.
Wildcare Exemptions Can Give You More Money
Things get a little bit more complicated when you get into wild card exemptions. This allows you to add an additional exempt dollar value to each item that you have to liquidate to increase how much money you get back.
For example, if your state has a $5,000 wild card exemption rule with a max of $1,000 per item, you could add an additional $1,000 onto what you receive from the sale from your home. You can also apply additional wild card exemptions for expensive items, such as a vehicle. However, once you hit a total of $5,000 in wild card exemptions, you cannot use that rule to exempt more property that you own. Some people use the wild card exemptions to protect certain items so that they can keep them in full, such as a piece of jewelry that has meaning to you.
Not quite sure how all of the bankruptcy laws apply to your situation? In addition to reading up on the law, you'll find that a bankruptcy lawyer is going to help explain it all for you in language that you understand.
Bankruptcy Attorneys are a great resource to help with these things.