A Bankruptcy Lawyer’s Blog

Properties Exempted Under Bankruptcy Chapter 7

Bankruptcy is a relief to the debtors who are really worried about their debts. Bankruptcy has manifold aspects. The debtor files for bankruptcy under any of the suitable chapters as introduced by US code.

Under bankruptcy chapter7, a debtor gets relief in form of exempted property which he /she can retain as his/her possession. This procedure of safeguarding a certain amount of property in favor of the debtor actually aims for a fresh start when they are overburdened by debts. As for an example, in many states the defaulter is allowed to keep clothing, household furnishings, an expensive car (may be inexpensive one that depends on the state law). Even after the closure of the bankruptcy cases the debtor needs at least some basic assets to lead his life further. Hence the bankruptcy code identifies basic needs and provide various property exemptions for the debtor.

Just like the rules for the exempted property varies from state to state, the percentage of exemptions enjoyed by the debtor is actually determined by the district court. There are also few limitations in this case, as all the properties of the debtor do not come under this category. The assets which are not discharged according to the chapter 7 bankruptcy code are excluded from this category. As it is already discussed, that the properties like household furnishings, cars are considered to be exempted similarly if the debtor is having any retirement fund or any other such kind of a fund it is considered to be out of reach of the creditors. Actually the amount of exempted property of the debtor depends on the state where he resides. Among the different types of exempted property for the different districts a few has been mentioned below:-

a)Tools for trade exemption – If the debtor is a motor mechanic or a dentist and the tools used by him are for earning their livelihood is considered under exempted property.

b)Farm tools exemption – If the defaulter is farmer in that case also the code according to the district law permits to keep the tools with him if his primary occupation is farming. However in some states farm tools include items which can be held in hand like hoes, axes, pitchforks, shovels, scythes. Whereas in other states farm tools also include ploughs, harnesses, mowers, reapers and other tools.

c)Crop exemption – The code also permits debtor to keep some products that are obtained as results of farming and raised annually or gathered in a single season.

d)Building materials exemption – It also permits a debtor to keep his certain amount of items needed to build or maintain structures like lumber, bricks, stones, iron. however this is not allowable in all states

e)Furnishings exemption – It also permits the debtor to keep a certain amount of furniture, equipments in his home and other things through which the home is decorated like carpets, drapes etc.

f)Health aids exemption – the debtor can also save the items which help him to keep his health maintained like wheelchairs, crutches, hearing aids. States either consider all the health aids as exempted or limit the total dollar amount.

g)Heirloom exemption- The bankruptcy code allows the debtor to pass certain assets which are possessed from generation to generation and which have some special emotional value or fiscal value.

h)Homestead exemption- It also saves a particular value or particular acres of farmhouse. The amount that the debtor can protect depends on the state where he lives. In few states unlimited homestead exemption is provided i. e. even a house worth millions of dollars cannot be taken under the liquidation of the chapter 7 bankruptcy code. On the other hand few states have no homestead exemption at all.

i)Animal exemption – Bankruptcy code also allows the debtor to keep some animals which are household pets, livestock or poultry. The animal exemption differs from state to state. In few states debtors are only allowed to keep livestock and poultry but not pets.

j)Appliance exemption- It also permits the debtor to keep some of the household equipments consumed by the help of electricity, gas or propane which may include refrigerator, stoves, washing machine, etc.

k)Arms & accessories exemption- The debtor under this code is allowed to keep some weapons which are the part of a soldier outfit or uniform such as the belt packs but not the clothes etc.

l)Household goods exemption – A debtor can also keep his household utensils which include linens, dinnerware, pots, and pans and small electronic equipments like radio toasters etc

m)Burial exemption – The debtor can also protect a cemetery plot, tomb, monument or the cash to purchase a burial plot. In some cases a few states allow the debtor to claim the a burial exemption only if the debtor does not use his homestead exemption. This exemption is available in most of the states

n)Jewelry exemption – This saves certain assets of the debtor which include articles of adornment and fashion like jewelry, and watches. However expensive jewelry is usually not included under this category although many states declare wedding and engagement rings. In most states the total jewelry exemption ranges from $250 to $1, 000.

o)Motor vehicle exemption- under this a debtor can save his self owned motor vehicle. In case if his motor cycle costs $10, 000 but the state in which he is residing allows a car exemption of $2, 500 then the debtor is still under debts of $8, 000 to his creditor as he has only equity of $2, 000 ($10, 000 – $8, 000) for himself ( this proves that the debtor can be able to pay his car payments). The debtor on the other hand if fails to pay it then the creditor can croak the car and sell it out in auction.

To learn more about bankruptcy related issues please log on to the given website http://www.lawandlegalcare.com Law and Legal Care is a law portal having eminent team of attorneys across US,and offers quality service to its clients.