If you’re filing for bankruptcy, you may be wondering about property exemptions.  If you are overwhelmed by your debts, bankruptcy can offer you a fresh start, and a new, clean slate.  The law recognizes that consumers will need some basic possessions (such as a place to live, and a method of transportation) in order to move forward.  As a result, the bankruptcy code includes property exemptions which allow you to exclude certain assets (in specified amounts) to provide for your basic needs.  If a property is exempt, it is not subject to your creditors’ claims.

When you file your bankruptcy petition, you will include a list (schedule) of your exempt property.  This schedule will include a description of the property, the law authorizing the exemption, the value of the exemption, and the market value of the property. The market value of the property is used for assessment purposes by creditors who may object to your exemptions.  Creditors have 30 days after the meeting of creditors to object to your stated exemptions.  If a creditor objects, they are required to prove that you’ve improperly claimed the exemption.

There are several categories of bankruptcy property exemptions.  These include the homestead exemption, automobile exemption, exemptions for household goods & furnishings, and retirement asset exemptions. The amount of allowable property exemptions vary.  The allowable amounts are determined by state or federal law.

Previously, property exemptions were based entirely on state law. Today, there are uniform federal standards for most states, with the exception of certain states that have opted-out of the federal standards.  To complicate things further, in 16 states, debtors are allowed to choose whether they will follow the maximum exemption amounts allowed by federal law – or whether they will follow the maximum exemption amounts allowed by state law.  Consult your bankruptcy attorney to determine the allowable exemption amounts in your particular state.