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What Are Bankruptcy Exemptions?

Posted By Allmand Law Firm, PLLC || 30-Jul-2013

Bankruptcy exemptions play a significant role during the filing process. They help debtors obtain protection for their assets and personal property against creditors. In short, exemptions provide legal options for debtors to keep their possessions during and after bankruptcy. Chapter 7 bankruptcy exemptions help determine what you can keep, while Chapter 13 bankruptcy exemptions help debtors obtain affordable payment plans.

Many consumers believe you have to give up personal property when you file bankruptcy. Exemptions provide protection for a number of assets and property while in bankruptcy. There are different types of exemptions and they each provide property protection based on asset value. Some exemptions will protect the entire value of an asset or personal property. There is also what is called a wildcard exemption that can provide additional protection.

If you plan on filing bankruptcy you should review the roles exemptions may play in your case. In Chapter 7 exemptions provide property protection so your property and assets are not used to satisfy creditors. Chapter 13 exemptions allow you to keep your property while making payments to your creditors. This helps in making monthly payments affordable based on your income ability.

Exemptions are available at the state and federal level. Depending on the state you live in you may be able to use exemptions at both levels. In some cases, it may be better to use federal exemptions over the state level. Usually, at the federal level you can get more protection since the amount of coverage is higher. There are exemptions available for various property items such as your house, vehicle, jewelry, and others.

Categories: Bankruptcy
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