50-State Bankruptcy Exemptions

Christmas, Florida 32709

Welcome

Welcome to LegalConsumer's listings of bankruptcy exemptions you can use in your state.

Here you'll find out:

State Exemption Laws

Every state has their own system of exemptions that applies in collection cases, for collecting debts under state law.

State exemptions laws are often found under sections of statutes called exemptions from collection or attachment.

A few states, like Michigan, have created a separate set of exemptions, meant only for bankruptcy proceedings. And California has two sets of exemptions to choose from

Federal Bankruptcy Exemptions under Section 522(d) 

The federal bankruptcy statute has its own list of exemptions under section 522 of the bankruptcy code.

These federal exemptions were created in the 1982 revision of the bankruptcy code. When those revisions were passed, a compromise was made that allowed states to "opt out" of the new federal exemption system and allow debtors in those states to only to use the exemptions under existing state law, (and some non-bankruptcy federal exemptions).

Which Exemption System Can You Use in Your State?

Only 19 states (see map above) allow you the option of using to use the Section 522(d) exemptions in the bankruptcy code. The remaining states have "opted out" and limit you the state exemptions.  

  • the Federal Bankruptcy Exemptions under Section 522, or,
  • your state's State Exemptions that apply to debt collection in your state

 Whatever system you choose, you must choose all your exemptions from that system.

So-called Federal "non-bankruptcy" exemptions

If you chose to use your state's exemptions, you are also allowed to claim federal "non-bankruptcy" exemptions. That is, exemptions for things like pensions and the like, where the exemption law is not found in bankruptcy  code section 522(d), but rather in some other federal law, like the one protecting railroad pensions, and the like, and IRAs and Social Security.

Will I Lose My House? 50-State Homestead Exemption Limits

Any homeowner who files for bankruptcy must pay particular attention to the homestead exemption available in their state.

The homestead applies to equity in the home, after deducting for mortgage liens. If there is any equity that is not protected by Homestead exemption, the trustee may decide to liquidate (sell) the property to raise money for your unsecured creditors.

For this reason, it is extremely important to understand the limits of your state's homestead exemption before you file for bankruptcy.

 

Will I Lose My Car? 50-State Motor Vehicle & Wildcard Exemptions

States vary widely on the amount of equity they protect and motor vehicles.

In some states you can protect more than $10,000 of vehicle value, while in other states you can only protect a few thousand dollars in equity in a vehicle.

And most states have a "wildcard" exemption which can be added (stacked) on other exemptions if you have more equity to protect. 

If you're leasing your vehicle then different laws apply. That's covered in another article, here.

If you have a car loan, you'll be asked if you want to keep the car or surrender it to your note holder. Or you'll also have a chance to buy the car at its current value in a process called redemption, which requires you to come up with the full amount, in cash to give to the creditor.

If you have a car that's worth a lot, the trustee might be interested in selling it to raise money for unsecured creditors. However since cars are very important part of a fresh start, most people don't lose their cars in bankruptcy. Primarily because by the time they reach bankruptcy, either the car isn't worth much, or has a lot of debt on it already.

However, during the Covid pandemic, the market for used cars got hot, and the value of used cars increased, so it's important to know if the equity in your car is fully protected by an exemption.

  •  

 

 

 

ADVERTISEMENT -