Bankruptcy exemptions allow you to keep certain things while discharging debts. The amount of the exemptions available in a case vary depending on whether you are single or married, and whether you have dependents. The exemptions apply to the equity of your property, meaning the value of an item less any debt attached to it, such as a home mortgage or car loan.
Typically, exempt assets include such things as: residential real estate with equity of about $15,000 or less, automobiles with equity about $3,000 or less, furnishings, modest jewelry, most retirement accounts, and tools or equipment used in business.
If some property is not exempt, bankruptcy usually requires that your surrender the property or pay at least its value in cash for the benefit of creditors. When surrendering property, the bankruptcy trustee will sell the property and use the money to pay debts.
An attorney can help you get the most out of your bankruptcy exemptions. If you have questions regarding the exemption limits and how to best utilize your assets prior to filing for bankruptcy, we can instruct you on your options.