A bankruptcy exemption allows you to keep some of your assets away from the reaches of your debtors. The exemptions you get depend on your state laws, nature of debts and the assets you own. Here is a three-step plan to help you maximize your exemptions:
Know What You Have
You cannot know what is excerpted and what is not until you know what you own. Therefore, the first step is to identify all your assets. Include (literally) everything, from the most obvious ones (such as real estate properties) to "small" assets such as pieces of clothing. They may be small, but you will have to spend money to replace them if you lose them to debtors.
Determine Which Exemptions You Qualify For
The next step is to determine which exemptions apply to your situation. There are federal and state bankruptcy exemption lists, and your state laws determine which ones you can take advantage of. Depending on your jurisdiction, you may be:
- Allowed to choose between state and federal exemptions (you have to choose; you can't mix them)
- Restricted to your state's bankruptcy exemptions
Don't forget that you have to meet a state's residency requirements in order to take advantage of its exemptions. If you don't meet these requirements, then you have to use the federal list. Also, there are federal nonbankruptcy exemptions that you can use if you have a choice and have chosen the state's bankruptcy exemption.
March Your Items with the Exemptions
The last step in this endeavor is to match your assets with the exemptions available to you. If you have a choice of using either state or federal exemptions, then you can try matching your list of assets to both sets of exemptions to see where you stand to gain the most.
Some exemptions are specific; for example, your marital home may be exempted. There are also general exemptions such as household assets. Therefore, you have to figure out where each asset belongs to determine if it is exempted. Lastly, make use of the wildcard exemption that allows you to exempt an asset that is not directly covered by exemption laws.
The major points are to include everything in the list, match your assets to the exemptions available (federal and state) and choose whichever offers you the best savings. If you involve an experienced bankruptcy lawyer, like Michael Hart D PC, then you can benefit from his or her skill and experiencing in matching items to exemptions rules for your maximum benefit.