What are bankruptcy exemption laws?

People suffering financial hardship often have more worries than just their mounting bills and inability to pay them. Often times people experience fear over losing their property and assets as part of the process. Although there are some instances in which nonessential property could be liquidated to satisfy a debt in bankruptcy, there are also ways to protect much of what is valuable.

One way to protect assets and property is through bankruptcy exemption laws. Bankruptcy exemption laws protect certain types of property from being seized by creditors when a person files for bankruptcy. Some common examples of exemption laws apply to specific amounts of equity in a person’s home, personal belongings, and retirement accounts. There are two main categories of bankruptcy exemptions you can utilize for asset protection: state exemption laws or federal exemption laws.

When looking at exemption laws, the protected property allowances and values depend on the type of property that a debtor seeks to protect. Exemptions are available for those seeking bankruptcy:
* Homestead exemption (up to applicable limits)
* Vehicle exemption (up to applicable limits)
* Tools of trade exemption (up to applicable limits)
* Personal property exemption for household goods (up to applicable limits)
* Retirement exemptions (up to applicable limits)
* Wildcard exemption (up to applicable limits)

In state exemption laws, the protected property allowances and values are more flexible and may cover more assets than under federal exemption laws. It is important to note that exemptions vary from state to state and may or may not protect high value items like your vehicle or home.

Bankruptcy exemption laws are designed to give people a fresh start after declaring bankruptcy by allowing them to keep some of their most essential belongings. However, every bankruptcy case is unique and requires unique allowances for asset protection. Consulting with a Citrus Heights bankruptcy attorney can ensure maximum protection of assets under exemption laws and other strategies designed to fit your unique situation.