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About Bankruptcy Exemptions

April 27, 2012 | Comments: 0 | Views: 295

One of the biggest concerns people have about filing for bankruptcy is what will happen to their assets. While a Chapter 13 bankruptcy can protect assets far better than a Chapter 7, there are other ways to keep assets and prevent liquidation. Bankruptcy laws are written in such a way as to help debtors keep their property, which are done through either federal or state exemption laws.

Federal Exemptions

The federal bankruptcy exemption laws are in place to allow any debtor to claim if eligible. Because there are often residency requirements held by state laws, any debtor who cannot claim a state bankruptcy exemption may be eligible to claim property protection under the federal exemptions. While many states offer more protection of property, the federal exemptions do have some great protection coverage for the essentials.

Under the federal Homestead Exemption, debtors can exempt their home up to a $125,000 value, $20,200 of which can be used towards a mobile home or other real estate property. Personal property items such as furniture, clothing, antiques and the like are limited to a total of $11,525 and $550 per item. Jewelry is allowed up to a $1,450 value and items used in a business trade up to $2,175. The federal exemption also allows for one motor vehicle up to a $3,450 value to be protected. Insurance, retirement and public assistance funds are generally completely exempt under the federal exemption.

State Exemptions

Many states are more generous with their property exemptions than what can be found in the federal exemptions. However, some people are not eligible to claim the state if exemptions if they have not lived in the state for at least 2 years. Those that do qualify could benefit from a higher bracket of protection. For example, some states allow for homes up to an unlimited value to be exempt under their Homestead Exemption. However, there may be some restrictions as to the amount of acreage that can be protected even if the home value is unlimited.

Many states also carry a higher value of personal property protection. Texas, for example, allows for debtors to claim up to $30,000 in personal property items for an individual or up to $60,000 for a family. Texas also allows for a motor vehicle of unlimited value per licensed member of a family to be protected, essentially allowing for multiple cars to be exempt. Farm equipment, tools of the trade and business machinery are also better protected under most state exemption laws than what can be found at the federal level.

The Lee Law Firm is a Dallas,Texas bankruptcy firm that aims to provide local residents with high quality legal representation at affordable rates. Their attorneys are professional and compassionate, giving clients the personalized attention they deserve. When filing bankruptcy, the Lee Law Firm is the right choice to help in the face of financial hardship.

Source: EzineArticles
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