You can calculate whether you’ll lose your vehicle in Chapter 7 bankruptcy if you know your state’s motor vehicle exemption amount, the car’s value, and the amount owed on a vehicle loan. The motor vehicle exemption protects your car, truck, motorcycle, or van equity.
However, the exemption amount must fully cover the vehicle’s equity. If it doesn't, the bankruptcy trustee responsible for managing your case can take your car in Chapter 7.
But that’s not the only qualification you must meet. You can’t file for bankruptcy on a car loan and keep the car without paying as agreed. If you don't pay the amount owed, the lender can use its lien rights to repossess your vehicle.
You don’t lose everything you own when filing for Chapter 7 bankruptcy. You can keep ”exempt” property needed to maintain employment and a household. Exempt property varies by state, but most people retain household furnishings, a retirement account, some home and car equity, and other necessary items.
So what happens to property you can’t exempt fully?
In Chapter 7, you’ll lose assets you can’t protect with an exemption, known as “nonexempt property.” The Chapter 7 bankruptcy trustee will sell your nonexempt property and distribute the money to creditors. Learn more about protecting property with bankruptcy exemptions.
Follow these four steps to answer the “Can I file bankruptcy and keep my car?” question.
If you own the car outright, your calculations end here. If you have a vehicle loan, you must meet another requirement outlined below in "If You Have a Car Loan When Filing for Chapter 7, You Must Do This."
Your state’s exemption statutes will tell you how much equity you can protect. Look for a motor vehicle exemption and a wildcard exemption that you can use on any property you choose. Some states will let you stack the two exemptions together. However, check the wildcard conditions carefully because some states limit wildcard use.
In your bankruptcy paperwork, you’ll report your vehicle's “fair market value,” or the amount you can sell it for, considering its current age and condition. Check websites such as Kelley Blue Book and the National Auto Dealers Association for values. Your bankruptcy trustee will likely want a printout from one of the sites to prove your vehicle’s value.
You’ll need to take any vehicle loan into account for this step.
If exemptions cover all your equity, you can file for bankruptcy and keep your car—the trustee can’t sell it. However, the trustee can take your car in Chapter 7 if you have nonexempt vehicle equity.
Here’s what the Chapter 7 trustee will do:
Example 1. Kevin owes $5,000 on a “vintage” Corvette worth $7,000. Because his state will let him use the motor vehicle exemption to exempt up to $5,000 of vehicle equity, the Chapter 7 bankruptcy trustee can’t sell Kevin’s car ($7,000 value – $5,000 car note = $2,000 equity). Kevin can file Chapter 7 and keep his car.
Example 2. Sonya owns a Harley worth $15,000, free and clear. But her state’s motor vehicle exemption is $5,350, leaving $9,650 in unprotected equity. The Chapter 7 trustee will sell Sonya’s Harley and, after deducting sales costs, recoup $9,250. The trustee will give Sonya the $5,350 exemption amount, keep the trustee’s sales fee, and distribute the remaining proceeds to Sonya’s creditors. They (the trustee and creditors) will take Sonya’s car in Chapter 7.
Example 3. Hannah has car equity of $4,000 and can exempt up to $3,500 using her state’s motor vehicle exemption. Because her state also has a $1,000 wildcard exemption, Hannah can protect her car by stacking the $3,500 motor vehicle exemption and $500 of the wildcard exemption. Hannah can keep her car if she files for bankruptcy.
Important note. Don't forget, if you have a car loan, you have another step. It's discussed below in "If You Have a Car Loan When Filing for Chapter 7, You Must Do This."
It’s possible if the trustee does one of the following:
Make sure your car payment is current before filing for Chapter 7. You can skip this step if you don’t have a car loan. But if you have a car loan, the following information is crucial.
Suppose you’re behind on your vehicle payments. In that case, the lender can take back the car, even if you’re in bankruptcy, and an exemption protects your equity. Why? Because the car secures the loan.
If you don’t pay as agreed, the lender can use the lien rights to recover the vehicle by doing the following:
If you’re behind on payments, you might have another option—redeeming the car. But it can be costly.
You redeem a vehicle by paying the lender the car’s market value in one lump sum payment, so if you owe more than the car is worth, this can be an excellent way to go. Many ask friends or family for help or use a lender specializing in bankruptcy redemptions.
Many lenders will let you keep a car after bankruptcy as long as you’re current on the payment and continue to make the payment after the case ends. The lender will give you the title when you pay the amount due under the discharged contract.
This arrangement works well because if the car breaks down or is in an accident, the filer can stop making payments and return the vehicle to the lender. However, without a contract in place, the payments aren’t reflected on the filer’s credit report, and the lender can repossess the car at any time.
Filers who don’t want to risk losing the vehicle can sign a new contract called a “reaffirmation agreement.” Although you might be able to convince the lender to agree to better terms, you should assume they’ll remain the same because the lender isn’t obligated to modify the loan. Therefore, while signing a reaffirmation agreement can help you keep a car in Chapter 7 bankruptcy, it isn’t a tool you should rely on if you’re behind on your payments.
Learn more about your car in Chapter 7 bankruptcy.
Did you know Nolo has made the law accessible for over fifty years? It’s true, and we want to ensure you find what you need. Below, you’ll find more articles explaining how bankruptcy works. And don’t forget that our bankruptcy homepage is the best place to start if you have other questions!
Our Editor's Picks for You |
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Helpful Bankruptcy Sites |
We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.
]]>Washington lets filers use the homestead exemption under either the federal or Washington state exemption system. However, you can’t mix exemptions from both lists, so select the system that will protect your most important assets.
To help you make an informed choice, we’ve listed the federal and Washington homestead exemption amounts below. We’ve also included links to more complete lists so you’ll have an easier time deciding which set will work best for you. If you’re married, remember that spouses can double some exemption amounts, but not all. Find out about other filing considerations for spouses.
Federal Homestead Exemption |
Washington Homestead Exemptions |
|
Homestead exemption amount |
$27,900 |
Homestead exemption amounts depend on the county and the previous year's median value. For instance, 2023 homestead exemptions ranged from $207,100 to $914,300. |
Can spouses who file a joint bankruptcy double the exemption? |
$55,800 is available to spouses who co-own property. |
See acreage limits below. |
Homestead exemption law |
11 U.S.C. § 522(d)(1) |
Wash. Rev. Code Ann. § 6.13.030 |
Other information |
Amounts will adjust on April 1, 2025. |
See below. |
Compare other federal and state exemptions. |
You can use the Washington homestead exemption to protect a house, condominium, mobile, or manufactured home serving as your principal residence. You can use the homestead exemption to protect personal property used as a residence, such as a mobile home, but the exemption amount is reduced significantly. (Wash. Rev. Code Ann. § 6.13.030.)
You can file for bankruptcy in Washington after living there for over 180 days. However, you must live in Washington much longer before using Washington exemptions, at least 730 days before filing, to be exact. Otherwise, you’d use the previous state’s exemptions.
But suppose you lived in multiple states during the two years before filing for bankruptcy. In that case, you'd use the exemptions of the state you lived in for most of the 180 days before the two years immediately preceding your filing. (11 U.S.C. § 522(b)(3)(A).) Learn more about filing for bankruptcy after moving to a new state.
Also, to claim the total value of the Washington homestead exemption, you must have purchased and owned the property for at least 1,215 days before the bankruptcy filing. If you can't meet this requirement, your homestead exemption will be limited to the current federal cap.
You'll also need to meet other requirements. Find out more about keeping your home in Chapter 7 or Chapter 13.
You can search for Washington exemption laws on the Washington State Legislature webpage. However, most statutes don't include updated amounts, and understanding statutory requirements can be challenging. It's best to consult with a local bankruptcy lawyer.
Bankruptcy mistakes, such as improperly disclosing or exempting assets, can be costly and often occur when filing without a bankruptcy lawyer. We've covered some of the most basic rules you'll encounter when protecting your home in bankruptcy. However, you must also meet other timing and exemption requirements to prevent losing your home.
A local bankruptcy lawyer’s knowledge and expertise will help you avoid losing your home and other valuable assets and ensure you maximize the homestead exemption.
Did you know Nolo has made the law easy for over fifty years? It’s true, and we want to ensure you find what you need. Below, you’ll find more articles explaining how bankruptcy works. And don’t forget that our bankruptcy homepage is the best place to start if you have other questions!
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We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.
Updated December 19, 2023
]]>Under the Colorado exemption system, homeowners can exempt up to $250,000 of their home or other property covered by the homestead exemption. The homestead exemption is $350,000 if the homeowner, spouse, or dependent is disabled or 60 or older. In Colorado, spouses cannot double the homestead exemption.
Example 1. If you own a house worth $370,000 and have a mortgage balance of $330,000, you have $40,000 of equity in the property. If you file a Chapter 7 bankruptcy, you can use the Colorado homestead exemption to protect all equity.
Example 2. Assume your mortgage is only $20,000 and can only exempt $250,000 of your $350,000 of equity. The Chapter 7 bankruptcy trustee would likely sell your house, give you $250,000 from the proceeds for your exemption, and use any amount remaining after deducting sales costs to pay unsecured creditors. If you wanted to keep the home, you could file for Chapter 13 and pay the $100,000 nonexempt equity portion to unsecured creditors through the Chapter 13 plan.
In Colorado, the homestead exemption applies to real property, such as your home or condominium. It will also protect a mobile home, manufactured home, or house trailer. You must occupy the property in order to take advantage of the homestead exemption.
The homestead exemption also applies to the sale proceeds of the property. The sale proceeds are exempt for two years after they are received. Also, a deceased owner’s spouse or children can claim the homestead exemption.
Some states allow bankruptcy filers to use the federal bankruptcy exemptions instead of the state exemptions. Colorado is not one of those states. If you reside in Colorado, you must use the state exemptions. Find out more about choosing the correct bankruptcy exemptions.
In Colorado, the homestead exemption is usually automatic, and you don’t have to file a homestead declaration in order to claim the homestead exemption in bankruptcy. However, with regard to certain older obligations incurred prior to July 1, 1975, the homestead exemption might not be available unless a homestead declaration is recorded.
Colorado’s homestead exemption is found in the Colorado Revised Statutes § 38-41-201 through § 38-41-209. To learn how to find state statutes, check Laws and Legal Research.
Colorado’s exemption amounts, including the homestead exemption, are adjusted periodically for inflation. You can find Colorado's statutes here or consult a bankruptcy attorney for the current homestead amount.
Did you know Nolo has made the law easy for over fifty years? It’s true, and we want to ensure you find what you need. Below you’ll find more articles explaining how bankruptcy works. And don’t forget that our bankruptcy homepage is the best place to start if you have other questions!
Our Editor's Picks for You |
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Preparing for Bankruptcy: What to Do With Bank Accounts, Automatic Payments, and Utility Deposits |
Helpful Bankruptcy Sites |
We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.
Updated December 18, 2023
]]>In Wyoming, you'll use Wyoming's state exemptions because the federal bankruptcy exemptions aren’t available (some states allow residents to choose between the two sets). You'll find Wyoming's homestead exemption amount listed below. Contact a local bankruptcy lawyer for current amounts and to find out about filing considerations for spouses.
Wyoming Homestead Exemption |
|
Homestead exemption amount |
$100,000 |
Can spouses who file a joint bankruptcy double the exemption? |
Yes |
Homestead exemption law |
Wyo. Stat. Ann. §§ 1-20-101 et seq. |
Other information |
See below. |
Where you'll find other exemptions |
Wyoming Legislature’s State Statutes & Constitution |
You or your family must occupy the property before claiming the exemption. Only your house, mobile home, or house trailer, and the lot or lots where your house is located will qualify for a homestead exemption.
If the home is held as a tenancy by entirety, you might have an additional way to protect your interests. Wyoming is one of about 25 states where a married couple can own property as tenants by entirety. Property held as a tenancy by entirety is owned by a married couple as a single marital entity, not as individuals.
If one spouse files for bankruptcy, not both, the bankruptcy trustee might be prevented from using the property equity to pay off debts. Your property equity could be fully protected. However, be warned that this is a tricky area of law and the protection doesn't work in all cases (for instance, it won't protect against tax debt).
Talk with a local bankruptcy attorney before filing to ensure you don’t lose valuable property. Making a mistake is risky because you don’t have an automatic right to dismiss a Chapter 7 case.
You can file for bankruptcy in Wyoming after living there for over 180 days. However, you must live in Wyoming much longer before using Wyoming exemptions, at least 730 days before filing, to be exact. Otherwise, you’d use the previous state’s exemptions.
But suppose you lived in multiple states during the two years before filing for bankruptcy. In that case, you'd use the exemptions of the state you lived in for most of the 180 days before the two-year period immediately preceding your filing. (11 U.S.C. § 522(b)(3)(A).) Learn more about filing for bankruptcy after moving to a new state.
You'll also need to meet other timing and exemption requirements to prevent losing your home in bankruptcy. Find out more about keeping your home in Chapter 7 or Chapter 13 or consult a bankruptcy lawyer.
You’ll find Wyoming’s homestead exemption on the Wyoming Legislature’s State Statutes & Constitution webpage. Still, the best way to learn the current homestead exemption amount and protect your assets is by consulting with a local bankruptcy lawyer.
Bankruptcy mistakes, such as improperly disclosing or exempting assets, can be costly and often occur when filing without a bankruptcy lawyer. A local bankruptcy lawyer’s knowledge and expertise will help you avoid losing your home and other valuable assets and ensure you maximize the homestead exemption.
Did you know Nolo has made the law easy for over fifty years? It’s true, and we want to ensure you find what you need. Below you’ll find more articles explaining how bankruptcy works. And don’t forget that our bankruptcy homepage is the best place to start if you have other questions!
Our Editor's Picks for You |
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Which Bankruptcy Chapter Should I File to Keep My House? |
What to Consider Before Filing Bankruptcy |
Preparing for Bankruptcy: What to Do With Bank Accounts, Automatic Payments, and Utility Deposits |
Helpful Bankruptcy Sites |
We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.
Updated October 6, 2023
]]>Texas lets filers use the homestead exemption under either the federal or Texas state exemption system. However, you can’t mix exemptions from both lists, so select the system that will protect your most important assets.
To help you make an informed choice, we’ve listed the federal and Texas homestead exemption amounts below. We’ve also included links to more complete lists so you’ll have an easier time deciding which set will work best for you.
If you’re married, remember that spouses can double some exemption amounts, but not all. Find out about other filing considerations for spouses.
Federal Homestead Exemption |
Texas Homestead Exemption |
|
Homestead exemption amount |
$27,900 |
Unlimited |
Can spouses who file a joint bankruptcy double the exemption? |
$55,800 is available to spouses who co-own property. |
See acreage limits below. |
Homestead exemption law |
11 U.S.C. § 522(d)(1) |
Tex. Prop. Code §§ 41.001 – 41.0241 |
Other information |
Amounts will adjust on April 1, 2025. |
Ten city acres or 100 rural acres. A family can double to 200 rural acres. |
Compare other federal and state exemptions. |
The Texas homestead exemption applies to real property serving as your primary residence, such as your home or condominium. Texas considers any improvements such as a swimming pool, barn, water tower, pumps, roads, and other items substantially affixed to your primary residence part of the homestead exemption. The unlimited homestead exemption also applies to a burial plot.
You can file for bankruptcy in Texas after living there for over 180 days. However, you must live in Texas much longer before using Texas exemptions, at least 730 days before filing, to be exact. Otherwise, you’d use the previous state’s exemptions.
But suppose you lived in multiple states during the two years before filing for bankruptcy. In that case, you'd use the exemptions of the state you lived in for most of the 180 days before the two years immediately preceding your filing. (11 U.S.C. § 522(b)(3)(A).) Learn more about filing for bankruptcy after moving to a new state.
Also, to claim the total value of the Texas homestead exemption, you must have purchased and owned the property for at least 1,215 days before the bankruptcy filing. If you can't meet this requirement, your homestead exemption is limited by federal law to $189,050 (this figure will be adjusted on April 1, 2025).
You'll also need to meet other requirements. Find out more about keeping your home in Chapter 7 or Chapter 13.
You can search for Texas exemption laws on the Texas Constitution and Statutes homepage or visit Texas Bankruptcy Exemptions. However, most statutes don't include updated amounts, and understanding statutory requirements can be challenging. It's best to consult with a local bankruptcy lawyer.
Bankruptcy mistakes, such as improperly disclosing or exempting assets, can be costly and often occur when filing without a bankruptcy lawyer. We've covered some of the most basic rules you'll encounter when protecting your home in bankruptcy. However, you must also meet other timing and exemption requirements to prevent losing your home.
A local bankruptcy lawyer’s knowledge and expertise will help you avoid losing your home and other valuable assets and ensure you maximize the homestead exemption.
Did you know Nolo has made the law easy for over fifty years? It’s true, and we want to ensure you find what you need. Below, you’ll find more articles explaining how bankruptcy works. And don’t forget that our bankruptcy homepage is the best place to start if you have other questions!
Our Editor's Picks for You |
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Which Bankruptcy Chapter Should I File to Keep My House? |
What to Consider Before Filing Bankruptcy |
Preparing for Bankruptcy: What to Do With Bank Accounts, Automatic Payments, and Utility Deposits |
Helpful Bankruptcy Sites |
We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.
Updated October 5, 2023
]]>In this article, you’ll learn how to find Virginia’s current homestead exemption amount and apply it in your bankruptcy case. We also explain other requirements you must meet when filing for bankruptcy in Virginia.
Under the Virginia exemption system, homeowners can exempt up to $25,000 of equity in a home or other property covered by the homestead exemption. The exemption applies to real property, which includes your home or condominium and personal property used as a residence, so your mobile home would also be covered.
The Virginia homestead exemption also allows individuals to deduct an additional $5,000 in real or personal property (including cash), or $10,000 if the debtor is 65 or older. This exemption type is often called a “wildcard” exemption. So you'll have $25,000 to protect your home, plus an additional $5,000 to $10,000 to use toward your home or any other property of your choosing.
Example. Suppose your house is worth $100,000. You have a $78,000 mortgage on the property, leaving $22,000 of home equity. If you file bankruptcy, your equity will be fully exempt using the $25,000 residential portion of the homestead exemption. Your creditors won’t be able to touch your equity, and you will keep your home. You’ll also be able to use the $5,000 wildcard portion toward any other property you choose.
If the property is held as a tenancy in the entirety, the property is jointly owned as a single marital entity, not as an individual. Holding property as a tenancy by the entirety might protect all of the equity in your residence if only one spouse files the bankruptcy case. However, this is one of the trickier rules in bankruptcy, so consult with a local bankruptcy attorney.
You can file for bankruptcy in Virginia after living there for over 180 days. However, you must live there for at least 730 days before using the Virginia exemptions. Otherwise, you’d use the previous state’s exemptions.
The calculation is different if you weren’t living in one particular state two years before your bankruptcy filing. You’d use the exemptions of the state you lived in for most of the 180 days before the two years immediately preceding your filing. (11 U.S.C. § 522(b)(3)(A).)
Learn more about filing for bankruptcy after moving to a new state.
Virginia’s homestead exemption is in the Code of Virginia Title 34. Specifically, the laws in Chapter 2, Sections 34-4 through 34-25 address the homestead exemptions of householders. The Code of Virginia is found online on the Virginia General Assembly website. If you need help finding state statutes, check out Laws and Legal Research.
Bankruptcy mistakes, such as improperly disclosing or exempting assets, can be costly and often occur when filing without a bankruptcy lawyer. A local bankruptcy lawyer’s knowledge and expertise will help you avoid losing your home and other valuable assets and ensure you maximize the homestead exemption.
Did you know Nolo has made the law accessible for over fifty years? It’s true, and we want to ensure you find what you need. Below, you’ll find more articles explaining how bankruptcy works. And don’t forget that our bankruptcy homepage is the best place to start if you have other questions!
Our Editor's Picks for You |
|
More Like This |
Which Bankruptcy Chapter Should I File to Keep My House? |
Other Articles You Might Enjoy |
Preparing for Bankruptcy: What to Do With Bank Accounts, Automatic Payments, and Utility Deposits |
Helpful Bankruptcy Sites |
We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.
Updated October 5, 2023
]]>The simple answer is your state decides whether you can use your state's bankruptcy exemptions or if you can pick the federal bankruptcy exemptions instead. Here's what you'll need to know to get started:
Once you know your options, you'll list everything you own and, if you have a choice, select the exemption set that will cover the assets you'd like to keep.
Currently, the following states allow filers to choose between state and federal bankruptcy exemptions. If your state gives you a choice, you must pick one list or the other. You can't mix and match items from both lists.
Filers who use state exemptions can also use federal nonbankruptcy exemptions.
The links above will take you to a complete state bankruptcy guide. If you don't reside in one of these states, you're limited to your own state's exemptions, and you'll find state exemptions here.
Although exemptions apply in Chapters 7 and 13, what happens to "nonexempt property" or assets not protected by an exemption will depend on the bankruptcy chapter.
If you file for Chapter 7 bankruptcy, you'll keep all "exempt" property covered by a bankruptcy exemption and lose any nonexempt assets. In Chapter 13, you'll keep all your property, but you'll pay your creditors for nonexempt assets through the Chapter 13 plan.
Use these links to learn more about how bankruptcy exemptions work in Chapter 7 and how exemptions work in Chapter 13.
You'll find commonly-used federal exemptions below. If you are a married couple filing jointly, you can double the exemption amounts. The amounts apply to cases filed between April 1, 2022, and April 1, 2025.
You can protect $27,900 of equity in your principal residence under federal exemptions. (11 USC § 522(d)(1).) You must live in the home to use the homestead exemption.
The residential property can be:
The homestead exemption isn't available to protect the equity in investment or rental properties.
Here are some commonly-used federal "personal property" exemptions (personal property is everything other than real estate):
Retirement accounts that are exempt from taxation are fully exempt in bankruptcy. However, the federal bankruptcy exemption limit for IRAs and Roth IRAS is $1,512,350. Learn more about your retirement plan in bankruptcy.
You can apply the federal wildcard exemption to any property you own. Currently, $1,475 plus $13,950 of any unused portion of your homestead exemption is available to exempt any property of your choosing. (11 USC § 522(d)(5).) To learn more, see the Wildcard Exemption.
Did you know Nolo has been making the law easy for over fifty years? It’s true—and we want to make sure you find what you need. Below you’ll find more articles explaining how bankruptcy works. And don’t forget that our bankruptcy homepage is the best place to start if you have other questions!
Our Editor's Picks for You |
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Helpful Bankruptcy Sites |
We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.
Updated October 5, 2023
]]>You'll use Utah's homestead exemption to protect some or all of your home's equity in Utah. Although some states allow filers to use federal bankruptcy exemptions, Utah is not one of them.
To help you make an informed choice, we’ve listed the homestead exemption amount below and have included links to more complete exemption lists.
If you’re married, keep in mind that spouses can double some exemption amounts, but not all. Find out about other filing considerations for spouses.
Utah Homestead Exemption |
|
Homestead exemption amount |
$45,100; $5,400 if not primary residence |
Can spouses who file a joint bankruptcy double the exemption? |
No. |
Homestead exemption law |
Utah Code Ann. §§ 78B-5-503; 78B-5-504 |
Other information |
Mobile home and water rights can be included; amounts are subject to change periodically. |
Where to find other exemptions. |
Under the Utah exemption system, homeowners can exempt up to $45,100 of their home or other property covered by the homestead exemption, such as a mobile home. You can use the homestead exemption to protect more than one parcel of land, but you can protect only up to one acre total. (Utah Code Ann. § 78B-5-504.)
Also, you can exempt up to $5,400 in real estate that is not your primary residence. (Utah Code Ann. § 78B-5-503.)
You can file for bankruptcy in Utah after living there for over 180 days. However, you must live in Utah much longer before using Utah exemptions (if that's the set you choose to use), at least 730 days before filing, to be exact. Otherwise, you’d use the previous state’s exemptions.
But suppose you lived in multiple states during the two years before filing for bankruptcy. In that case, you'd use the exemptions of the state you lived in for most of the 180 days before the two years immediately preceding your filing. (11 U.S.C. § 522(b)(3)(A).) Learn more about filing for bankruptcy after moving to a new state.
We've covered some of the most basic rules you'll encounter when protecting your home in bankruptcy. However, you must also meet other timing and exemption requirements to prevent losing your home. Find out more about keeping your home in Chapter 7 or Chapter 13 or consult a bankruptcy lawyer.
Did you know Nolo has made the law accessible for over fifty years? It’s true, and we want to ensure you find what you need. Below, you’ll find more articles explaining how bankruptcy works. And don’t forget that our bankruptcy homepage is the best place to start if you have other questions!
Our Editor's Picks for You |
|
More Like This |
Which Bankruptcy Chapter Should I File to Keep My House? |
What to Consider Before Filing Bankruptcy |
Preparing for Bankruptcy: What to Do With Bank Accounts, Automatic Payments, and Utility Deposits |
Helpful Bankruptcy Sites |
We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.
Updated October 5, 2023
]]>In Tennessee, you'll use Tennessee's homestead exemption to protect some or all of your home's equity. Although some states allow filers to use federal bankruptcy exemptions, Tennessee is not one of them. However, you can supplement Tennessee's state exemptions with the federal nonbankruptcy exemptions.
To help you make an informed choice, we’ve listed the homestead exemption amount below. We’ve also included links to the federal and state exemption lists so you’ll have an easier time deciding whether bankruptcy will work for you.
If you’re married, keep in mind that spouses can double some exemption amounts, but not all. Find out about other filing considerations for spouses.
Tennessee Homestead Exemptions |
|
Homestead exemption amount |
$5,000 |
Can spouses who file a joint bankruptcy double the exemption? |
|
Homestead exemption law |
Tenn. Code Ann. § 26-2-301 |
Other information |
Amounts subject to change. |
Where to find other exemptions |
In Tennessee, the homestead exemption applies to real and personal property serving as your principal residence, including your home and condominium. Any interest in a family cemetery not larger than one acre, a burial plot in a cemetery, or a space in a mausoleum is also protected. See the chart above for spousal, dependent, and age-related exemption increases.
If you hold property as tenancy by entirety with your spouse: If one spouse files for bankruptcy—not both—the bankruptcy trustee might be prevented from using the property equity to pay off debts. However, this is a tricky area of law. Before filing, talk with a local bankruptcy attorney to ensure you don’t lose valuable property.
Here’s an additional benefit: If a person dies leaving a spouse or dependent children in Tennessee, the deceased’s homestead exemption can be transferred to the survivors. The survivors don't have to use that amount to pay the deceased's debts.
You can file for bankruptcy in Tennessee after living there for over 180 days. However, you must live in Tennessee much longer before using Tennessee exemptions (if that's the set you choose to use), at least 730 days before filing, to be exact. Otherwise, you’d use the previous state’s exemptions.
But suppose you lived in multiple states during the two years before filing for bankruptcy. In that case, you'd use the exemptions of the state you lived in for most of the 180 days before the two years immediately preceding your filing. (11 U.S.C. § 522(b)(3)(A).) Learn more about filing for bankruptcy after moving to a new state.
We've covered some of the most basic rules you'll encounter when protecting your home in bankruptcy. However, you must also meet other timing and exemption requirements to prevent losing your home. Find out more about keeping your home in Chapter 7 or Chapter 13 or consult a bankruptcy lawyer.
Did you know Nolo has made the law easy for over fifty years? It’s true, and we want to ensure you find what you need. Below, you’ll find more articles explaining how bankruptcy works. And don’t forget that our bankruptcy homepage is the best place to start if you have other questions!
Our Editor's Picks for You |
|
More Like This |
Which Bankruptcy Chapter Should I File to Keep My House? |
What to Consider Before Filing Bankruptcy |
Preparing for Bankruptcy: What to Do With Bank Accounts, Automatic Payments, and Utility Deposits |
Helpful Bankruptcy Sites |
We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.
Updated October 4, 2023
]]>Oregon lets filers use either the federal exemption system or Oregon’s state exemption system. However, you can’t mix exemptions from both lists, so you’ll want to select the system that will protect your most important assets.
To help you make an informed choice, we’ve listed the federal exemption amount below. We’ve also included links to more complete federal and state exemption lists so you’ll have an easier time deciding which set will work best for you.
If you’re married, remember that spouses can double some exemption amounts, but not all. Find out about other filing considerations for spouses.
Federal Homestead Exemption |
Oregon Homestead Exemption |
|
Homestead exemption amount |
$27,900 |
$40,000 |
Can spouses who file a joint bankruptcy double the exemption? |
$55,800 is available to spouses who co-own property. |
$50,000 |
Homestead exemption law |
11 U.S.C. § 522(d)(1) |
Or. Rev. Stat. §§ 18.385, 13.395, 18.402, 18.428 |
Other information |
Amounts will adjust on April 1, 2025. |
Amounts change periodically. |
Compare other federal and state exemptions. |
You can file for bankruptcy in Oregon after living there for over 180 days. However, you must live in Oregon much longer before using Oregon exemptions (if that's the set you choose to use), at least 730 days before filing, to be exact. Otherwise, you’d use the previous state’s exemptions.
But suppose you lived in multiple states during the two years before filing for bankruptcy. In that case, you'd use the exemptions of the state you lived in for most of the 180 days before the two years immediately preceding your filing. (11 U.S.C. § 522(b)(3)(A).) Learn more about filing for bankruptcy after moving to a new state.
We've covered some of the most basic rules you'll encounter when protecting your home in bankruptcy. However, you'll also need to meet other timing and exemption requirements to prevent losing your home. Find out more about keeping your home in Chapter 7 or Chapter 13 or consult a bankruptcy lawyer.
Did you know Nolo has made the law easy for over fifty years? It’s true, and we want to ensure you find what you need. Below you’ll find more articles explaining how bankruptcy works. And don’t forget that our bankruptcy homepage is the best place to start if you have other questions!
Our Editor's Picks for You |
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More Like This |
Which Bankruptcy Chapter Should I File to Keep My House? |
What to Consider Before Filing Bankruptcy |
Preparing for Bankruptcy: What to Do With Bank Accounts, Automatic Payments, and Utility Deposits |
Helpful Bankruptcy Sites |
We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.
Updated October 4, 2023
]]>In this article, you’ll learn how to find Oklahoma’s current homestead exemption amount and apply it in your bankruptcy case. We also explain other requirements you must meet when filing for bankruptcy in Oklahoma.
Oklahoma's homestead exemption protects equity in your home or manufactured home if it’s your primary residence or other property covered by the homestead exemption. The homestead can be up to half an acre in a municipality or 160 acres elsewhere. (31 O.S. § 1.)
You can exempt an unlimited amount of equity in your primary residence. It's one of the most generous homestead exemptions in the country. However, if you use more than 25% of the total square footage of your property for business purposes, your exemption will be limited to $5,000. You can, however, rent your property and still claim the total exemption amount as long as you don’t live in another residence. (31 O.S. § 1.)
Example. Nelson owns two properties, a residential home he lives in with his children and a rental property he leases to tenants. Nelson can use Oklahoma's homestead exemption to protect the equity in the residential house but not the leased property.
Learn more about Oklahoma's bankruptcy exemptions.
You can search Oklahoma’s statutes online on the Oklahoma Legislature’s website. The exemption requirements will be in the statute. (31 O.S. § 1.)
Filers behind on a mortgage will have additional hurdles to meet. For instance, in Chapter 7, you must be current on your mortgage payment when you file. Otherwise, you could lose your home. In Chapter 13, you must earn enough to afford the Chapter 13 payment, which is rarely easy.
Also, you must own the property for at least 1,215 days before the bankruptcy filing. Otherwise, federal law will limit the homestead exemption amount. Find out more about your home in Chapter 7 and your home in Chapter 13.
You can file for bankruptcy in Oklahoma after living there for over 180 days. However, you must live there for at least 730 days before using the Oklahoma exemptions. Otherwise, you’d use the previous state’s exemptions.
The calculation is different if you weren’t living in one particular state two years before your bankruptcy filing. You’d use the exemptions of the state you lived in for most of the 180 days before the two years immediately preceding your filing. (11 U.S.C. § 522(b)(3)(A).)
Learn more about filing for bankruptcy after moving to a new state.
You don’t need to file a separate homestead declaration in your county recorder’s office before claiming Oklahoma’s homestead exemption in bankruptcy. The procedure involves listing your home, its value, and the applicable exemption statutes in your bankruptcy petition.
Specifically, you’ll list your property on Schedule A/B: Property and exemptions on Schedule C: The Property You Claim as Exempt.
Bankruptcy mistakes, such as improperly disclosing or exempting assets, can be costly and often occur when filing without a bankruptcy lawyer. A local bankruptcy lawyer’s knowledge and expertise will help you avoid losing your home and other valuable assets and ensure you maximize the homestead exemption.
Did you know Nolo has made the law easy for over fifty years? It’s true—and we want to ensure you find what you need. Below you’ll find more articles explaining how bankruptcy works. And don’t forget that our bankruptcy homepage is the best place to start if you have other questions!
Our Editor's Picks for You |
|
More Like This |
Which Bankruptcy Chapter Should I File to Keep My House? |
Other Articles You Might Enjoy |
Preparing for Bankruptcy: What to Do With Bank Accounts, Automatic Payments, and Utility Deposits |
Helpful Bankruptcy Sites |
We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.
Updated October 3, 2023
]]>New York lets filers use either the federal exemption system or New York’s state exemption system, so you’ll have two homestead amounts to choose between. However, you can’t mix exemptions from both lists, so you’ll want to select the system that will protect your most important assets.
We've listed both exemption amounts below to help you make an informed choice. We’ve also included links to more complete federal and state exemption lists so you’ll have an easier time deciding which set will work best for you.
If you hold property as tenancy by entirety with your spouse: If one spouse files for bankruptcy, not both, the bankruptcy trustee might be prevented from using the property equity to pay off debts. However, this area is tricky. Talk with a local bankruptcy attorney about filing considerations for spouses to ensure you don’t lose valuable property.
Federal Homestead Exemption |
New York Homestead Exemptions |
|
Homestead exemption amount |
$27,900 |
|
Can spouses who file a joint bankruptcy double the exemption? |
$55,800 is available to spouses who co-own property. |
Yes if spouses co-own property. |
Homestead exemption law |
11 U.S.C. § 522(d)(1) |
NYCPLR §§ 5206 (a), (d), and (e) |
Other information |
Amounts will adjust on April 1, 2025. |
Amounts will adjust on April 1, 2024. |
Compare other federal and state exemptions. |
In New York, the homestead exemption applies to real property, including your home, condominium, or co-op. It also applies to a mobile home.
You can file for bankruptcy in New York after living there for more than 180 days. However, you must live in New York much longer before using New York exemptions, at least 730 days before filing, to be exact. Otherwise, you’d use the previous state’s exemptions.
But suppose you lived in multiple states during the two years before filing for bankruptcy. In that case, you'd use the exemptions of the state you lived in for most of the 180 days before the two-year period immediately preceding your filing. (11 U.S.C. § 522(b)(3)(A).) Learn more about filing for bankruptcy after moving to a new state.
You’ll find New York's homestead exemption in the New York state statutes at the Code Civil Practice Law and Rules § 5206 on the New York State Senate website. Also, New York’s exemption amounts adjust every three years (figures reflect the April 1, 2021 changes).
But you won’t find the most recent homestead amount in the statute. Go to New York’s Department of Financial Services website and search for “Exemption from Application to the Satisfaction of Money Judgments.” Learn about finding state statutes in Laws and Legal Research.
We've covered some of the most basic rules you'll encounter when protecting your home in bankruptcy. However, you'll also need to meet other timing and exemption requirements to prevent losing your home. Find out more about keeping your home in Chapter 7 or Chapter 13 or consult a bankruptcy lawyer.
Did you know Nolo has made the law easy for over fifty years? It’s true, and we want to ensure you find what you need. Below you’ll find more articles explaining how bankruptcy works. And don’t forget that our bankruptcy homepage is the best place to start if you have other questions!
Our Editor's Picks for You |
|
More Like This |
Which Bankruptcy Chapter Should I File to Keep My House? |
What to Consider Before Filing Bankruptcy |
Preparing for Bankruptcy: What to Do With Bank Accounts, Automatic Payments, and Utility Deposits |
Helpful Bankruptcy Sites |
We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.
Updated September 22, 2023
]]>In Missouri, you'll use Missouri's state exemptions because the federal bankruptcy exemptions aren’t available (some states allow residents to choose between the two sets). You'll find Missouri's homestead exemption amount listed below. Contact a local bankruptcy lawyer for current amounts and to find out about other filing considerations for spouses.
Missouri Homestead Exemption |
|
Homestead exemption amount |
$15,000 |
Can spouses who file a joint bankruptcy double the exemption? |
Yes |
Homestead exemption law |
Mo. Rev. Stat. § 513.475 |
Other information |
Amounts are subject to change. |
Where to find other exemptions. |
Missouri Bankruptcy Exemptions |
In Missouri, the homestead exemption applies to real property, including your home, condominium, or co-op. You must own and occupy the property in order to protect it. The homestead exemption also applies to a manufactured home you have converted to real property by permanently affixing it to the land.
Example 1. If you own a house worth $120,000 and have a mortgage balance of $110,000, you have $10,000 of equity in the property. If you file a Chapter 7 bankruptcy, you can use the homestead exemption to protect all equity.
Example 2. Assume your mortgage is only $80,000 and you can exempt $15,000 of your $40,000 equity. The Chapter 7 bankruptcy trustee would likely sell your house, give you $15,000 for your exemption, and use what remains after sales costs to pay unsecured creditors. If you wanted to keep the home, you could file for Chapter 13 and pay the $25,000 nonexempt equity portion to unsecured creditors through the Chapter 13 plan.
Property held as a tenancy by the entirety. This ownership interest exists when property is owned by a married couple as a single marital entity, not as individuals. If one spouse files for bankruptcy, the trustee might be prevented from using the property equity to pay off debts. However, this is a tricky area of law so talk with a local bankruptcy attorney to ensure you don't lose valuable property.
You can file for bankruptcy in Missouri after living there for more than 180 days. However, you must live in Missouri much longer before using Missouri exemptions—at least 730 days before filing, to be exact. Otherwise, you’d use the previous state’s exemptions.
But suppose you lived in multiple states during the two years before filing for bankruptcy. In that case, you'd use the exemptions of the state you lived in for most of the 180 days before the two-year period immediately preceding your filing. (11 U.S.C. § 522(b)(3)(A).) Learn more about filing for bankruptcy after moving to a new state.
You'll also need to meet other timing and exemption requirements to prevent losing your home in bankruptcy. Find out more about keeping your home in Chapter 7 or Chapter 13 or consult a bankruptcy lawyer.
You’ll find Missouri’s homestead exemption in the Mo. Rev. Stat. § 513.475 on the Missouri Revisor of Statutes website. Still, the best way to protect your assets is by consulting with a local bankruptcy lawyer.
Did you know Nolo has made the law easy for over fifty years? It’s true, and we want to ensure you find what you need. Below you’ll find more articles explaining how bankruptcy works. And don’t forget that our bankruptcy homepage is the best place to start if you have other questions!
Our Editor's Picks for You |
|
More Like This |
Missouri Bankruptcy Exemptions |
What to Consider Before Filing Bankruptcy |
Preparing for Bankruptcy: What to Do With Bank Accounts, Automatic Payments, and Utility Deposits |
Helpful Bankruptcy Sites |
We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.
Updated September 21, 2023
]]>In Maine, you'll use Maine's state exemptions because the federal bankruptcy exemptions aren't available (some states allow residents to choose between the two sets). Maine's exemption amount increases if you have dependents. Contact a local bankruptcy lawyer for current amounts and to find out about other filing considerations for spouses.
Maine Homestead Exemption |
|
Homestead exemption amount |
$80,000; $160,000 for a debtor with minor dependents, or people 60 years and older, or those with a disability |
Can spouses who file a joint bankruptcy double the exemption? |
Check with a local attorney. |
Homestead exemption law |
Me. Rev. Stat. Ann. tit. 14, § 4422(1) |
Other information |
Amount changes periodically. |
The homestead exemption applies to real and personal property used as your residence in Maine, including a house, mobile home, co-op, or condominium. The exemption also includes burial plots. It also applies to property sales proceeds for up to six months.
Example 1. If you own a house worth $120,000 and have a mortgage balance of $80,000, you have $40,000 of equity in the property. If you file a Chapter 7 bankruptcy, you can use the homestead exemption to protect all equity.
Example 2. Assume your mortgage is only $20,000 and could only exempt $80,000 of your $100,000 of equity. The Chapter 7 bankruptcy trustee would likely sell your house, give you $80,000 from the proceeds for your exemption, and use any amount remaining after deducting sales costs to pay unsecured creditors. If you wanted to keep the home, you could file for Chapter 13 and pay the $20,000 nonexempt equity portion to unsecured creditors through the Chapter 13 plan.
You can file for bankruptcy in Maine after living there for more than 180 days. However, you must live in Maine much longer before using Maine exemptions, at least 730 days before filing, to be exact. Otherwise, you'd use the previous state's exemptions.
But suppose you lived in multiple states during the two years before filing for bankruptcy. In that case, you'd use the exemptions of the state you lived in for most of the 180 days before the two-year period immediately preceding your filing. (11 U.S.C. § 522(b)(3)(A).) Learn more about filing for bankruptcy after moving to a new state.
You'll also need to meet other timing and exemption requirements to prevent losing your home in bankruptcy. Find out more about keeping your home in Chapter 7 or Chapter 13 or consult a bankruptcy lawyer.
You'll find Maine's homestead exemption in the Maine Revised Statutes at Me. Rev. Stat. Ann. tit. 14, § 4422(1) on the Maine Legislature website, but the best way to protect your assets is by consulting with a local bankruptcy lawyer.
Did you know Nolo has made the law easy for over fifty years? It’s true, and we want to ensure you find what you need. Below you’ll find more articles explaining how bankruptcy works. And don’t forget that our bankruptcy homepage is the best place to start if you have other questions!
Our Editor's Picks for You |
|
More Like This |
Which Bankruptcy Chapter Should I File to Keep My House? |
What to Consider Before Filing Bankruptcy |
Preparing for Bankruptcy: What to Do With Bank Accounts, Automatic Payments, and Utility Deposits |
Helpful Bankruptcy Sites |
We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.
Updated September 21, 2023
]]>
Under the Illinois exemption system, homeowners can exempt up to $15,000 of equity in a home or other property covered by the homestead exemption.
For example, let’s say your house is worth $100,000. You have a $90,000 mortgage on the property, leaving $10,000 of home equity. Your equity will be fully exempt using the Illinois homestead exemption if you file for bankruptcy. Your creditors won’t be able to touch your equity, and you will keep your home (as long as you can continue making mortgage payments and paying taxes).
The homestead exemption applies to real and personal property you use as a residence, including your home, condominium, mobile home, or co-op. The homestead exemption also applies to sale proceeds from the sale of any real or personal property for up to one year from the date you sell the property.
In Illinois, the homestead exemption is automatic. You don’t have to file a homestead declaration to claim the homestead exemption in bankruptcy. However, to protect your home, you must also know how real estate is treated in Chapters 7 and 13. Consider reading Your Home in Chapter 7 and Your Home in Chapter 13.
In Illinois, married couples filing a joint bankruptcy can double the homestead exemption amount and protect up to $30,000 of home equity. Both spouses must have an ownership interest in the property to double the amount.
You can learn about the advantages and disadvantages of joint bankruptcy filings in Filing Considerations for Married Couples.
A tenancy by the entirety is often called a "super exemption," although it’s not an exemption. If you and your spouse hold your home as a tenancy in the entirety and only one spouse files for bankruptcy, you could have greater protection against creditors because, in that situation, creditors are usually unable to take it to pay debts.
However, there are limits to the protection. For instance, a tenancy by the entirety won’t protect the residence against some tax debts. Because this is one of the trickier protections, you'll want to consult a lawyer about your situation.
Illinois’s homestead exemption is in the Illinois state statutes at 735 Ill. Comp. Stat. 5/12-901 and 5/12-902 on the Illinois General Assembly website. (You can learn how to find state statutes in Laws and Legal Research.)
The statute portion of the Illinois General Assembly website might not post the most current exemption amounts. If a session of the General Assembly has ended and the amounts were updated, the current amounts will be posted in the General Assembly Public Acts area.
Did you know Nolo has made the law easy for over 50 years? It’s true, and we want to ensure you find what you need. Below you’ll find more articles explaining how bankruptcy works. And don’t forget that our bankruptcy homepage is the best place to start if you have other questions.
Our Editor's Picks for You |
|
More Like This |
Illinois Bankruptcy Exemptions |
What to Consider Before Filing Bankruptcy |
What Not to Do Before Bankruptcy |
Helpful Bankruptcy Sites |
We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.
Updated September 20, 2023
]]>California bankruptcy exemptions protect your property in bankruptcy, and becoming familiar with bankruptcy exemptions before filing will help you determine whether your assets will be at risk.
If you have more questions, read Filing for Bankruptcy in California. You’ll find answers, helpful checklists, and an interactive bankruptcy quiz link.
Bankruptcy helps struggling people get back on their feet by lessening their debt burden, not stripping them of everything they own. Exemptions allow bankruptcy filers to keep things needed to maintain a home and employment.
But paying creditors is also an important consideration. Bankruptcy exemptions balance these interests by letting filers keep necessary property but not unnecessary luxury items. Creditors receive bankruptcy funds when a bankruptcy filer owns “nonexempt” property not covered by a bankruptcy exemption.
You’ll compare your property to California’s exemption laws. In most states (not all), debtors can use exemption laws to keep property from a creditor's reach in and outside bankruptcy. California has limitations, too, which we explain below. However, here's how it works generally.
Example. Big Creditor sued Ronin and received a $5,000 money judgment. When Big Creditor attempted to “levy” or remove money from Ronin’s bank account, Ronin objected in court. Because the state’s exemption law allowed Ronin to protect $1,500 of funds in a bank account, Big Creditor could seize only $3,500.
Example. When Maria filed for bankruptcy, she also had $5,000 in her checking account. She listed the state’s $1,500 cash exemption in her bankruptcy petition and gave the nonexempt $3,500 to the bankruptcy trustee.
Yes, but you must use the California bankruptcy exemptions because the federal bankruptcy exemptions aren’t available in this state. However, California filers can use the federal nonbankruptcy exemptions. You’ll find both lists below.
In many cases, married filers can double the exemption amount when filing together when they both own the property. Check with a local bankruptcy lawyer for specifics.
Some states let filers choose between state and federal bankruptcy exemption laws, but California isn’t one of them. In California, you must use state exemptions to keep property in bankruptcy.
However, California is the only state with two state exemption systems and you’ll still be able to select the California exemption set that works best for you. You can also use any of the federal nonbankruptcy exemptions.
Some states allow you to double the exemption amount if you are a married couple filing jointly. In California, however, spouses can’t double exemptions, with a few exceptions.
Below you’ll find exemptions commonly used by California bankruptcy filers.
The homestead exemption protects a certain amount of equity in your principal residence. In System 1 (also known as § 704 exemptions), you can exempt real or personal property you reside in at the time of filing for bankruptcy, including a mobile home, boat, stock cooperative, community apartment, planned development, or condominium, up to $600,000 - 704.730.
Learn more about the homestead exemption and protecting your home in bankruptcy.
The motor vehicle exemption protects equity in your car, truck, motorcycle, or another vehicle. The System 1 vehicle exemption is $3,625 - 704.010. Find out about protecting cars in bankruptcy and how the motor vehicle exemption works in a Chapter 7 case.
Most tax-exempt pensions and retirement accounts are exempt because federal law lets filers keep tax-exempt retirement accounts in bankruptcy. These retirement accounts include 401(K)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and traditional and Roth IRAs to $1,512,350 per person. (11 USC 522(b)(3)(C), (n); amounts valid for bankruptcy cases filed between April 1, 2022, and March 31, 2025.)
You can check with your fund to find out if it qualifies for tax-exempt status. Additionally, California provides that the following pensions and retirement accounts are exempt under California law:
California 704 Personal Property Exemptions
California 704 Wage Benefits
California 704 Public Benefits
California 704 Insurance Benefits
California’s System 2 (also known as § 703.140(b) exemptions) only applies in bankruptcy (you can't use them to protect your property against creditors outside of bankruptcy). Consider talking to a knowledgeable bankruptcy attorney about exemptions permitted in your area.
Under System 2, California’s homestead exemption is $31,950 for real or personal property used as a residence. 703.140(b)(1).
In System 2, you can exempt up to $6,375 of equity in motor vehicles. 703.140(b)(2).
You can protect $1,700 and any unused amount of burial or homestead exemption (currently $31,950 in total if the filer doesn’t use the homestead exemption) toward any property you choose. 703.140(b)(5). Find out about the wildcard exemption in bankruptcy.
Most tax-exempt pensions and retirement accounts are exempt because federal law lets filers keep tax-exempt retirement accounts in bankruptcy. These retirement accounts include 401(K)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and traditional and Roth IRAs to $1,512,350 per person. (11 USC 522(b)(3)(C), (n); amounts valid for bankruptcy cases filed between April 1, 2022, and March 31, 2025.)
Additionally, California protects ERISA-qualified pension, annuities, and benefits necessary for support under § 703.140(b)(10). You can check with your fund to determine if it qualifies for tax-exempt status.
Personal Property
Public Benefits
Insurance
Unless otherwise noted, all law references are to the California Code of Civil Procedure. The California Judicial Council last adjusted the exemption amounts for inflation on April 1, 2022, and the next update will be on April 1, 2025.
You'll find California's statutes online on the California Legislative Information website. The best way to verify exemptions is by consulting a local bankruptcy lawyer.
One of two things will happen. You'll either lose nonexempt property or pay to keep it, depending on whether you file for Chapter 7 or Chapter 13. Here's how it works.
In Chapter 7, the bankruptcy trustee sells nonexempt property and distributes the proceeds to creditors. In Chapter 13, filers pay the value of the nonexempt property to unsecured creditors. Learn about secured and unsecured debt in bankruptcy.
The procedural differences are necessary because filers can keep all property in Chapter 13 but not in Chapter 7. Without different systems, creditors would receive less in Chapter 13 than in a Chapter 7 case.
Example. Suppose you couldn't exempt a motorcycle in Chapter 7, and the Chapter 7 trustee sold it and paid unsecured creditors $10,000 after deducting sales costs. If you filed for Chapter 13, you'd pay unsecured creditors at least $10,000 through the Chapter 13 repayment plan to keep the motorcycle.
Chapter 7 works for people who can’t afford to repay creditors. Chapter 13 filers typically earn too much to qualify for Chapter 7 and must pay into a five-year repayment plan. Before filing for bankruptcy, you’ll take a “means test” to determine whether you qualify for Chapter 7 or 13.
Occasionally, people qualifying for Chapter 7 file for Chapter 13 to prevent a home foreclosure, car repossession, or wage garnishment. The Chapter 13 plan allows the filer to catch up on back payments over time, a benefit not available in Chapter 7.
Most Chapter 7 cases close after four months, although the Chapter 7 bankruptcy trustee sometimes needs additional time to sell property or resolve a dispute. Chapter 13 cases take three to five years to complete.
You can file for bankruptcy in California after living there for over 180 days. However, you must live in California for at least 730 days before using California exemptions. Otherwise, you'd use the previous state's exemptions.
Suppose you hadn’t lived in one state the entire two years before filing. In that case, you'd use the exemptions of the state you lived in the longest during the 180 days before the two years immediately preceding your filing. (11 U.S.C. § 522(b)(3)(A).)
More rules exist, including requirements for multiple bankruptcy filings. Find out more about filing for bankruptcy after moving to a new state and who can and can't file for bankruptcy.
If you don't exempt your property carefully, you could lose it. Answers to these questions might help you steer clear of typical issues.
Do I automatically get to keep my exempt property? Generally, no. Here's the procedure you'll need to follow: Select the exemption set that best protects your property, list the exempt assets and applicable exemption laws on Schedule C: The Property You Claim as Exempt, and file it with your other required paperwork.
Will someone check my bankruptcy exemptions? The bankruptcy trustee, the court-appointed official tasked with managing your case, will review Schedule C to ensure you have the right to protect the claimed property. A trustee who disagrees with your exemptions will file an objection with the court. The judge will decide whether you can keep the property.
Example. Jeff owns a rare, classic car worth $15,000, but the state vehicle exemption will only partially protect it. Believing that the car qualifies as art, Jeff exempts it using his state's unlimited artwork exemption. The trustee reviews Schedule C, disagrees with Jeff's characterization, and files an objection with the court. After consideration, the judge will likely side with the trustee, determining that the vehicle doesn't qualify as a piece of art.
Most trustees will likely try to work out the matter informally by discussing it at the 341 meeting of creditors or by phone or email. If you can’t resolve the problem, the trustee will file a motion with the bankruptcy court.
It's worth noting that it's not a good idea to finesse exemptions. Not only are you obligated to supply correct information on your bankruptcy forms, but purposefully making inaccurate statements could be fraudulent. Bankruptcy fraud is punishable by up to $250,000, 20 years in prison, or both.
Chapter 13 bankruptcy filers will almost always want to hire a bankruptcy lawyer. Chapter 13 is too complicated for most people to navigate successfully.
Chapter 7 filers also benefit from hiring a bankruptcy lawyer. Still, it’s more feasible to represent yourself if you have a relatively simple Chapter 7 case. But you should know that Chapter 7 filers can’t dismiss a Chapter 7 matter without court approval, so it’s prudent to consult a bankruptcy lawyer about potential issues. The extra step could help prevent unexpected property loss.
You can expect to pay $1,500 to $2,500 for the average Chapter 7 case and more for a Chapter 13 matter. Bankruptcy lawyers with more experience will charge higher fees than those practicing in large cities because of the costs associated with doing business.
Even so, most bankruptcy matters won’t require a top-tier lawyer. But because of the specialized nature of bankruptcy rules, you will want someone who has filed many cases.
At the time of writing, filing fees are $338 for Chapter 7 and $313 for Chapter 13, and costs for mandatory credit counseling and debt management courses run $50 to $75.
No, not in a Chapter 7 case. Chapter 7 lawyers won’t file your matter before you’ve paid in full because the bankruptcy court would erase any outstanding balance with other dischargeable debts. You can pay Chapter 13 attorneys’ fees in installments through the Chapter 13 plan.
Did you know Nolo has made the law easy for over fifty years? It’s true, and we want to ensure you find what you need. Below, you’ll find more articles explaining bankruptcy and how it works. And don’t forget that our bankruptcy homepage is the best place to start if you have other questions!
Our Editor's Picks for You |
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Filing a Chapter 7 Bankruptcy: Basic Steps |
Articles You Might Like |
Preparing for Bankruptcy: What to Do With Bank Accounts, Automatic Payments, and Utility Deposits |
Helpful Bankruptcy Sites |
We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.
Updated August 29, 2023
North Carolina bankruptcy exemptions protect your property in bankruptcy, and becoming familiar with bankruptcy exemptions before filing will help you determine whether your assets will be at risk.
If you have more questions, read Filing for Bankruptcy in North Carolina. You’ll find answers, helpful checklists, and an interactive bankruptcy quiz link.
Bankruptcy helps struggling people get back on their feet by lessening their debt burden, not stripping them of everything they own. Exemptions allow bankruptcy filers to keep things needed to maintain a home and employment.
But paying creditors is also an important consideration. Bankruptcy exemptions balance these interests by letting filers keep necessary property but not unnecessary luxury items. Creditors receive bankruptcy funds when a bankruptcy filer owns “nonexempt” property not covered by a bankruptcy exemption.
You’ll compare your property to North Carolina’s exemption laws. In most states (not all), debtors can use exemption laws to keep property from a creditor's reach in and outside bankruptcy.
Example. Big Creditor sued Ronin and received a $5,000 money judgment. When Big Creditor attempted to “levy” or remove money from Ronin’s bank account, Ronin objected in court. Because the state’s exemption law allowed Ronin to protect $1,500 of funds in a bank account, Big Creditor could seize only $3,500.
Example. When Maria filed for bankruptcy, she also had $5,000 in her checking account. She listed the state’s $1,500 cash exemption in her bankruptcy petition and gave the nonexempt $3,500 to the bankruptcy trustee.
Yes, but you must use the North Carolina bankruptcy exemptions because the federal bankruptcy exemptions aren’t available in this state. However, North Carolina filers can use the federal nonbankruptcy exemptions. You’ll find both lists below.
In many cases, married filers can double the exemption amount when filing together when they both own the property. Check with a local bankruptcy lawyer for specifics.
North Carolina bankruptcy filers can protect home equity using the North Carolina homestead exemption, equity in a car using the North Carolina motor vehicle exemption, and more.
The homestead exemption protects up to $35,000 in equity of any real or personal property used as a residence. Both spouses must be on the title to double this exemption. This exemption increases to $60,000 if the debtor is age 65 or older, the property is held as tenants by the entirety or joint tenants with the right of survivorship, and the debtor's spouse has died. (N.C. Gen. Stat. § 1C-1601(a)(1).)
Property owned as tenants by the entirety is exempt without any equity limit concerning the debts of one spouse; however, applying this exemption can be tricky. Consider consulting with a bankruptcy lawyer. (In re Chandler, 148 B.R. 13 (E.D. N.C. 1992).)
You can exempt up to $35,000 in equity of burial plots if you haven’t used the homestead exemption. (N.C. Gen. Stat. § 1C-1601(a)(1).) Learn more about the North Carolina homestead exemption and protecting your home in bankruptcy.
You can exempt up to $3,500 in one motor vehicle. (N.C. Gen. Stat. § 1C-1601(a)(3).) This exemption does not apply if you purchased the vehicle within 90 days of filing bankruptcy. (N.C. Gen. Stat. § 1C-1601(d).)
Find out about protecting cars in bankruptcy and how the motor vehicle exemption works in a Chapter 7 case.
You can use any unused portion of the homestead or burial exemption, up to $5,000, to exempt any other property. This is generally referred to as a wildcard exemption. (N.C. Gen. Stat. § 1C-1601(a)(2).) This exemption does not apply if the debtor purchased the property within 90 days of filing bankruptcy. (N.C. Gen. Stat. § 1C-1601(d).)
North Carolina has an additional wildcard exemption of $500. (N.C. Const. Art. X, § 1.)
Most tax-exempt pensions and retirement accounts are exempt because federal law lets filers keep tax-exempt retirement accounts in bankruptcy. These retirement accounts include 401(K)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and traditional and Roth IRAs to $1,512,350 per person. (11 USC 522(b)(3)(C), (n); amounts valid for bankruptcy cases filed between April 1, 2022, and March 31, 2025.)
You can check with your fund to find out if it qualifies for tax-exempt status. Additionally, North Carolina provides that the following pensions and retirement accounts are exempt under North Carolina law:
The following public benefits are exempt under North Carolina law:
You can exempt the following personal property in North Carolina:
You'll find North Carolina's statutes online on the General Assembly website. State exemption amounts are adjusted periodically and are not being updated in this article. You should verify exemptions independently or consult a local bankruptcy lawyer. To learn how, see Nolo’s Legal Research Center.
One of two things will happen. You'll either lose nonexempt property or pay to keep it, depending on whether you file for Chapter 7 or Chapter 13. Here's how it works.
In Chapter 7, the bankruptcy trustee sells nonexempt property and distributes the proceeds to creditors. In Chapter 13, filers pay the value of the nonexempt property to unsecured creditors. Learn about secured and unsecured debt in bankruptcy.
The procedural differences are necessary because filers can keep all property in Chapter 13 but not in Chapter 7. Without different systems, creditors would receive less in Chapter 13 than in a Chapter 7 case.
Example. Suppose you couldn't exempt a motorcycle in Chapter 7, and the Chapter 7 trustee sold it and paid unsecured creditors $10,000 after deducting sales costs. If you filed for Chapter 13, you'd pay unsecured creditors at least $10,000 through the Chapter 13 repayment plan to keep the motorcycle.
Chapter 7 works for people who can’t afford to repay creditors. Chapter 13 filers typically earn too much to qualify for Chapter 7 and must pay into a five-year repayment plan. Before filing for bankruptcy, you’ll take a “means test” to determine whether you qualify for Chapter 7 or 13.
Occasionally, people qualifying for Chapter 7 file for Chapter 13 to prevent a home foreclosure, car repossession, or wage garnishment. The Chapter 13 plan allows the filer to catch up on back payments over time, a benefit not available in Chapter 7.
Most Chapter 7 cases close after four months, although the Chapter 7 bankruptcy trustee sometimes needs additional time to sell property or resolve a dispute. Chapter 13 cases take three to five years to complete.
You can file for bankruptcy in North Carolina after living there for over 180 days. However, you must live in North Carolina for at least 730 days before using North Carolina exemptions. Otherwise, you'd use the previous state's exemptions.
Suppose you hadn’t lived in one state the entire two years before filing. In that case, you'd use the exemptions of the state you lived in the longest during the 180 days before the two years immediately preceding your filing. (11 U.S.C. § 522(b)(3)(A).)
More rules exist, including requirements for multiple bankruptcy filings. Find out more about filing for bankruptcy after moving to a new state and who can and can't file for bankruptcy.
If you don't exempt your property carefully, you could lose it. Answers to these questions might help you steer clear of typical issues.
Do I automatically get to keep my exempt property? Generally, no. Here's the procedure you'll need to follow: Select the exemption set that best protects your property, list the exempt assets and applicable exemption laws on Schedule C: The Property You Claim as Exempt, and file it with your other required paperwork.
Will someone check my bankruptcy exemptions? The bankruptcy trustee, the court-appointed official tasked with managing your case, will review Schedule C to ensure you have the right to protect the claimed property. A trustee who disagrees with your exemptions will file an objection with the court. The judge will decide whether you can keep the property.
Example. Jeff owns a rare, classic car worth $15,000, but the state vehicle exemption will only partially protect it. Believing that the car qualifies as art, Jeff exempts it using his state's unlimited artwork exemption. The trustee reviews Schedule C, disagrees with Jeff's characterization, and files an objection with the court. After consideration, the judge will likely side with the trustee, determining that the vehicle doesn't qualify as a piece of art.
Most trustees will likely try to work out the matter informally by discussing it at the 341 meeting of creditors or by phone or email. If you can’t resolve the problem, the trustee will file a motion with the bankruptcy court.
It's worth noting that it's not a good idea to finesse exemptions. Not only are you obligated to supply correct information on your bankruptcy forms, but purposefully making inaccurate statements could be fraudulent. Bankruptcy fraud is punishable by up to $250,000, 20 years in prison, or both.
Chapter 13 bankruptcy filers will almost always want to hire a bankruptcy lawyer. Chapter 13 is too complicated for most people to navigate successfully.
Chapter 7 filers also benefit from hiring a bankruptcy lawyer. Still, it’s more feasible to represent yourself if you have a relatively simple Chapter 7 case. But you should know that Chapter 7 filers can’t dismiss a Chapter 7 matter without court approval, so it’s prudent to consult a bankruptcy lawyer about potential issues. The extra step could help prevent unexpected property loss.
You can expect to pay $1,500 to $2,500 for the average Chapter 7 case and more for a Chapter 13 matter. Bankruptcy lawyers with more experience will charge higher fees than those practicing in large cities because of the costs associated with doing business.
Even so, most bankruptcy matters won’t require a top-tier lawyer. But because of the specialized nature of bankruptcy rules, you will want someone who has filed many cases.
At the time of writing, filing fees are $338 for Chapter 7 and $313 for Chapter 13, and costs for mandatory credit counseling and debt management courses run $50 to $75.
No, not in a Chapter 7 case. Chapter 7 lawyers won’t file your matter before you’ve paid in full because the bankruptcy court would erase any outstanding balance with other dischargeable debts. You can pay Chapter 13 attorneys’ fees in installments through the Chapter 13 plan.
Did you know Nolo has made the law easy for over fifty years? It’s true, and we want to ensure you find what you need. Below, you’ll find more articles explaining bankruptcy and how it works. And don’t forget that our bankruptcy homepage is the best place to start if you have other questions!
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Updated August 29, 2023
Read on for details about the homestead exemption, one of the most popular bankruptcy exemptions.
The homestead exemption protects or “exempts” equity in the home in which you reside. Almost every state has a homestead exemption you can use to protect your home’s equity from creditors in and outside of bankruptcy.
You use a homestead exemption the same way you use other bankruptcy exemptions. Bankruptcy exemptions protect some of your property from creditors. You'll list your property and the exemption protecting it in your bankruptcy petition.
Bankruptcy exemption amounts vary by state, so the amount of home equity you can protect will depend on where you live. Also, your state might allow you to use the federal exemption system. If you're given a choice, select your list carefully. You're limited to the exemptions in the list you choose.
Below you'll find links to state-specific homestead exemption articles. If your state doesn't appear in the first list, you'll find your state's homestead exemption statute and a link to the state's online statutes in the next chart
Exemptions change periodically. These 2021 figures are not being updated. You can meet with a bankruptcy attorney to learn current amounts and how exemptions apply to your situation.
Alaska $72,900 or fed. exemption§§ 09.38.010; 8 AAC 95.030(a) |
Kentucky $5,000 or fed. exemption |
Vermont $125,000 or fed. exemptiontit. § 27-101 |
Delaware $125,000 |
Louisiana $35,000§ 20.1 |
West Virginia $35,000§ 38-10-4 |
D.C. Unlimited or fed. exemption§ 15-501(1)(14) |
Mississippi $75,000§§ 85-3-1, 85-3-21 |
Most exemption statutes have requirements included in the law and, possibly, the current exemption amount. However, many states don’t post exemption increases when the amount changes.
If the homestead exemption in the statute is less than we’ve posted, don’t rely on it. A local bankruptcy attorney can give you the current homestead amount and evaluate whether you qualify to keep your home in bankruptcy.
To find other exemptions in your state and determine whether you can use the federal bankruptcy exemptions, go to Bankruptcy Exemptions by State.
A Chapter 7 trustee will sell your home and distribute the proceeds to creditors if you can't protect all the home's equity. In Chapter 13, you can pay creditors an amount equal to your nonexempt equity through the three- to five-year Chapter 13 repayment plan and keep the home.
Learn about the other requirements you'll need to meet to keep your house in bankruptcy.
All exemptions have exclusions or “fine print” that restrict use. We explain some of the rules you should be aware of below. Your local bankruptcy lawyer can explain how they might apply in your case. Also, the bankruptcy chapter you file will determine what will happen to your home if you can’t protect all of the equity. You'll find more information about these issues below.
Although it's possible to strike up an agreement with your mortgage lender to bring your overdue mortgage current in Chapter 7, the lender doesn’t have to work with you, and many won’t. To ensure you don’t lose your house in Chapter 7, you’ll want to be current on your mortgage, be able to protect all equity with a homestead exemption and continue making your payment after bankruptcy.
Homestead exemptions aren't always sufficient to protect all of a homeowner's equity. Check whether your state offers a "wildcard exemption" which will allow you to exempt any property of your choosing. The federal exemptions offer a wildcard exemption.
In many instances, you can stack the wildcard exemption on top of your homestead exemption, increasing the total protectable amount. However, some states limit a wildcard's use by precluding real estate or cash.
Federal law restricts homestead exemptions to prevent people from shielding their assets by moving to states with unlimited homestead exemptions shortly before filing for bankruptcy. You must have purchased your home at least 40 months before bankruptcy before you'll qualify for the state's homestead exemption.
However, an exception exists. If you sold your home and bought a new one with the sale proceeds in the new state, the time you owned your first home will count toward the 40-month requirement.
Suppose you can't satisfy the homestead domicile requirement. In that case, federal law caps your homestead exemption at $189,050 regardless of your state exemption amount (for cases filed between April 1, 2022, and March 31, 2025). (28 U.S.C. 522(p),(q).)
Your homestead exemption is also capped at $189,050 if you have committed bankruptcy fraud or other crimes (for cases filed between April 1, 2022, and March 31, 2025). (28 U.S.C. 522(p),(q).) Learn more about bankruptcy fraud and the consequences of bankruptcy fraud.
Did you know Nolo has made the law easy for over fifty years? It’s true—and we want to ensure you find what you need. Below you’ll find more articles explaining how bankruptcy works. And don’t forget that our bankruptcy homepage is the best place to start if you have other questions!
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]]>In this article, you’ll learn how to find North Carolina’s current homestead exemption amount and apply it in your bankruptcy case. We also explain other requirements you must meet when filing for bankruptcy in North Carolina.
You can use the North Carolina homestead exemption to exempt equity in your home, condominium, or co-op if you or your dependents live on the property. You can also use it to protect a burial plot for you or your dependents. (N.C. Gen. Stat. § 1C-1601(a)(1).)
Example. Nelson owns two properties, a residential home he lives in with his children and a rental property he leases to tenants. Nelson can use North Carolina's homestead exemption to protect the equity in the residential house but not the leased property.
The North Carolina homestead amount was $35,000 when we last checked on May 26, 2021, and $60,000 for those 65 and older “…if the property was previously owned as a tenant by the entireties or as a joint tenant with rights of survivorship and the former co-owner of the property is deceased.” (N.C. Gen. Stat. § 1C-1601(a)(1).)
If you're unsure how to calculate home equity, here's what you'll do. Subtract the mortgage balance from the home’s value (the price it would sell for). The difference is the “equity.” It's the amount you could keep if you sold the home and paid off the home loan.
Example. Jem owes $125,000 on a home worth $150,000, giving her $25,000 in home equity. Jem can protect all her home equity in bankruptcy using North Carolina's $35,000 homestead exemption.
You can search North Carolina’s statutes online on the North Carolina General Assembly website. Look for N.C. Gen. Stat. § 1C-1601(a)(1)—you’ll paste it into the citation box.
The exemption requirements will be in the statute and, possibly, the current exemption amount. However, many states don’t post exemption amount increases in the statute when the exemption amount changes.
If the amount in the statute is less than we’ve posted, don’t rely on it. A local bankruptcy attorney can give you the current homestead amount and evaluate whether you qualify to keep your home in bankruptcy.
Yes. North Carolina permits married couples to double the homestead exemption if they both own the home and file a joint bankruptcy—but not if it’s one spouse’s sole property.
Filing for bankruptcy with your spouse can be tricky, especially if one spouse has significant separate property. It could be used to pay the other spouse’s debts. Learn more about important filing considerations for married couples.
Example. Andrew and Ali bought a home together shortly after marrying. Because they're both on the home's title and filed for bankruptcy together, they can double the homestead exemption.
Example. When Mari and Jorge filed for bankruptcy, they were living in a home Mari purchased before their marriage. The homestead exemption didn't qualify for doubling because Jorge had no ownership interest in the property.
No, not in North Carolina. Some states have a wildcard exemption you can stack onto the homestead exemption. However, North Carolina’s wildcard exemption isn’t separate from the homestead exemption and doesn’t help filers protect more home equity.
The wildcard exemption in North Carolina works by letting you apply any unused homestead exemption amount towards personal property up to $5,000. (N.C. Gen. Stat. § 1C-1601(a)(2)). (Amount valid as of May 26, 2021.)
When you can’t exempt all your home equity, whether you keep or lose your house will typically depend on whether you file for Chapter 7 or 13. Here are the basics.
When a Chapter 7 filer’s home has nonexempt equity, the Chapter 7 trustee assigned to the case will sell it and give the homestead exemption amount to the filer. The remaining proceeds pay sales costs, the trustee’s fee, and “unsecured debts”—bills not secured by collateral, like most credit card balances, medical bills, and personal loans.
However, suppose the sales costs would eat up all the nonexempt equity, leaving nothing for creditors. In that case, the trustee would “abandon” the home, and you’d keep it.
By contrast, the Chapter 13 trustee won’t sell the home if the homestead exemption doesn’t cover all the home’s equity. Instead, the filer must pay unsecured creditors for the nonexempt equity through the Chapter 13 plan (however, you can deduct sales costs from the plan payment—the calculation allowance ensures creditors receive the same amount in Chapters 7 and 13).
A Chapter 13 plan typically lasts three or five years. You must be able to pay the monthly mortgage payment and catch up on any missed payments, but you can spread the arrearages over the plan. Typically, Chapter 13 filers must also pay car payments when keeping a financed car and certain “priority debts” in full, such as recent income tax balances and support obligations. Other debts, like credit card balances and medical bills, often receive a fraction of what’s owed.
Learn more about debts you must pay in Chapter 13 bankruptcy.
Filers behind on a mortgage will have additional hurdles to meet. For instance, in Chapter 7, you must be current on your mortgage payment when you file. Otherwise, you could lose your home. In Chapter 13, you must earn enough to afford the Chapter 13 payment, which is rarely easy.
Learn about your home in Chapter 7 and your home in Chapter 13.
Some states allow bankruptcy filers to use federal bankruptcy exemptions instead of state exemptions. North Carolina isn't one of those states. If you reside in North Carolina, you must use the state exemptions (but you can protect more with North Carolina’s homestead exemption than the federal exemption).
Find out more about North Carolina Bankruptcy Exemptions.
You can file for bankruptcy in North Carolina after living there for over 180 days. However, you must live there for at least 730 days before using the North Carolina exemptions. Otherwise, you’d use the previous state’s exemptions.
The calculation is different if you weren’t living in one particular state two years before your bankruptcy filing. You’d use the exemptions of the state you lived in for most of the 180 days before the two years immediately preceding your filing. (11 U.S.C. § 522(b)(3)(A).)
Learn more about filing for bankruptcy after moving to a new state.
You don’t need to file a separate homestead declaration in your county recorder’s office before claiming North Carolina’s homestead exemption in bankruptcy. The procedure involves listing your home, its value, and the applicable exemption statutes in your bankruptcy petition.
Specifically, you’ll list your property on Schedule A/B: Property and exemptions on Schedule C: The Property You Claim as Exempt.
Bankruptcy mistakes, such as improperly disclosing or exempting assets, can be costly and often occur when filing without a bankruptcy lawyer. A local bankruptcy lawyer’s knowledge and expertise will help you avoid losing your home and other valuable assets and ensure you maximize the homestead exemption.
Did you know Nolo has made the law easy for over fifty years? It’s true—and we want to ensure you find what you need. Below you’ll find more articles explaining how bankruptcy works. And don’t forget that our bankruptcy homepage is the best place to start if you have other questions!
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Updated September 22, 2023
]]>Learn more about using different types of bankruptcy exemptions.
Exemptions allow you to keep some assets safe in bankruptcy, such as an inexpensive car, professional tools, clothing, and a retirement account. If you can exempt an asset, you don’t have to worry about the bankruptcy trustee appointed to your case taking it and selling it for your creditors' benefit or paying to keep it. (We explain how exemptions work in Chapters 7 and 13 below.)
Many exemptions protect specific property types, such as a motor vehicle or furniture, up to a particular dollar amount. Sometimes an exemption protects the entire value of the asset. Some states have a "wildcard exemption" that can be applied to any property you own.
Exemptions always protect the same amount of property regardless of the chapter filed. However, what happens to "nonexempt" property you can't protect with a bankruptcy exemption will depend on whether you file for Chapter 7 or Chapter 13 bankruptcy.
Chapter 7 bankruptcy is a liquidation bankruptcy where the appointed trustee sells your nonexempt assets to pay your creditors. Exemptions help you protect your assets in Chapter 7 bankruptcy because the bankruptcy trustee can’t sell exempt property.
For example, suppose your state has a $5,000 motor vehicle exemption, and you have one car worth $4,000. In that case, the exemption will cover all of the car's equity, and you can keep it. For more information about keeping a car in Chapter 7 and other property, see Exemptions in Chapter 7 Bankruptcy.
A Chapter 13 bankruptcy allows you to keep all your property while paying some or all of your debt in a three- to five-year Chapter 13 repayment plan. But this benefit comes at a cost. You'll have to pay nonexempt creditors for the property you can't protect with an exemption.
Nonpriority unsecured creditors, such as credit card issuers, must receive at least as much as the value of the property you can't exempt. So in Chapter 13 bankruptcy, being able to exempt all or most of your property helps keep your monthly plan payment low.
Learn more about exemptions in Chapter 13 bankruptcy.
Each state has a set of bankruptcy exemptions, and federal law provides a federal bankruptcy exemption set, too. Some states require you to use the state exemptions, while others allow you to choose the state or the federal bankruptcy exemption set. But you must choose one or the other--you can't mix and match exemptions from two sets.
The state’s exemption laws you’ll qualify to use will depend on where you lived during the last two years, called the "domicile requirements." For more information about the differences between state and federal exemptions and domicile requirements, read Which Exemptions Can You Use In Bankruptcy?
A second set of federal exemptions called "federal nonbankruptcy exemptions" can be used along with your state’s exemptions. For more information, see The Federal Nonbankruptcy Exemptions.
Did you know Nolo has made the law easy for over fifty years? It’s true—and we want to ensure you find what you need. Below you’ll find more articles explaining how bankruptcy works. And don’t forget that our bankruptcy homepage is the best place to start if you have other questions!
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]]>You’ll also learn why paying for nonexempt property in Chapter 13 helps ensure creditors receive equal treatment under Chapters 7 and 13.
No one loses everything when filing for bankruptcy. Each state has a list of the property a bankruptcy filer can keep, with some states letting filers choose between the state’s exemptions or federal bankruptcy exemptions.
When you prepare your bankruptcy paperwork, you’ll disclose everything you own and indicate which items are protected by bankruptcy exemptions. The Chapter 13 bankruptcy trustee assigned to your case reviews your exemptions for accuracy.
Most people can keep all personal belongings and furniture because household items you use daily aren’t typically worth much. However, you'll be limited regarding valuable things, like your home, car, jewelry, family heirlooms, collectibles, savings and investments, and other expensive assets.
Some people can protect everything they own using bankruptcy exemptions, while others will have a substantial amount of fully and partially nonexempt assets. In most cases, your nonexempt property will be nonessential luxury items most people don’t need, like boats or vacation cabins.
Learn about protecting a house or car in Chapter 13 bankruptcy.
Your local Chapter 13 bankruptcy lawyer will likely do a cursory property review when first meeting with you to determine how much property you might need to pay for through your plan. Otherwise, review these state bankruptcy exemption lists or read more about keeping property in Chapter 13.
You have to pay for it. Here’s why.
Bankruptcy filers can protect the same amount of property in both Chapters 7 and 13. Chapter 13 creditors are entitled to the value of your nonexempt property (those things not covered by an exemption) to offset losses.
In Chapter 13, you must pay the amount creditors would have received had you filed for Chapter 7. So even though the process for paying creditors in Chapters 7 and 13 differs, you'll want to understand what happens to assets you can't protect with an exemption in Chapter 7.
Chapter 7 bankruptcy is a “liquidation” chapter. If you can’t exempt something in this chapter, the bankruptcy trustee will sell it, return the exemption amount to you, and pay creditors with the amount remaining after deducting the trustee’s fee and sales costs.
Chapter 13 bankruptcy is a “repayment” chapter. The Chapter 13 trustee won’t sell property, even if you ask. Instead, you must pay an amount equal to the nonexempt portion your creditors would have received in Chapter 7. This is a threshold amount, and you might have to pay more if your income is high or you have significant debts that must be paid in full.
We explain more about Chapter 13 payments in the "Calculating Your Chapter 13 Payment" section below.
In a Chapter 13 bankruptcy, you propose a plan to repay some or all of your debts through monthly payments that you’ll make to a bankruptcy trustee. In general, the amount you’ll pay will depend on your:
You'll determine how much you can pay by subtracting allowed expenses from your income. You’ll qualify for Chapter 13 if the amount you can afford will cover all the debt you’re legally required to pay.
But that isn't the only criterion. Your creditors must also get at least as much as they would have if you’d filed for Chapter 7, which is why the value of your nonexempt property enters the equation. Learn more about your obligations in Chapter 13 bankruptcy.
Understanding and meeting all of the Chapter 13 plan requirements can be complex. These examples help illustrate how property can impact your payment.
Example 1. Emma is working in the tech industry in San Francisco. She makes too much money to qualify for Chapter 7 but struggles to pay a $24,000 credit card debt because of the high cost of living. The only property she owns is an old futon and an old car, which she can protect with bankruptcy exemptions.
After meeting with a bankruptcy attorney, she learns she’ll pay her discretionary income of $275 per month in a 60-month repayment plan for a total of $16,500. Any remaining credit card balance will get wiped out when she completes the plan. She decides to explore other options because she won’t save anything after paying the trustee and her attorney fees.
Example 2. Brayden makes minimum wage working as a coffee barista and struggles to pay his bills after a divorce. Because he was awarded spousal support in the divorce settlement, he doesn’t qualify for a Chapter 7 discharge. He’s also unable to protect $50,000 in home equity and a recreational vehicle worth $20,000 with bankruptcy exemptions, so, hoping to keep the house and RV, he’s considering filing for Chapter 13 bankruptcy.
Brayden met with a bankruptcy attorney and learned his monthly discretionary income is $200. However, because he has $70,000 in nonexempt property, Brayden must pay a minimum of $1,167 monthly in a 60-month repayment plan. Brayden isn’t a candidate for Chapter 13 bankruptcy because his barista wage isn’t sufficient to support the required repayment plan payment.
The Chapter 13 repayment plan rules are relatively complicated. Still, you can get an idea about the minimum amount you’d need to pay. If you are filing because you don’t qualify for Chapter 7, here’s what you’ll do (the requirements are more lenient otherwise).
You must earn enough to pay all your required debts to qualify. You must also pay all of your disposable income to creditors, with unsecured creditors receiving at least as much as they’d receive in Chapter 7.
Drafting a Chapter 13 plan that the bankruptcy court will "confirm" or approve is a complicated task. This simplified explanation is provided to aid understanding only. Your bankruptcy lawyer can determine the specific amount you’d be required to pay in Chapter 13 bankruptcy.
Did you know Nolo has been making the law easy for over fifty years? It’s true—and we want to make sure you find what you need. Below you’ll find more articles explaining how bankruptcy works. And don’t forget that our bankruptcy homepage is the best place to start if you have other questions!
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]]>A wildcard exemption comes in handy because it allows you to save property you wouldn’t ordinarily be able to protect. For instance, you might use it on sentimental yet valuable property, such as your grandmother’s player piano or your childhood collection of baseball cards.
In this article, you'll learn:
Keep in mind that each state has a set of state exemptions, but your state might allow you to choose the federal bankruptcy exemptions instead. Reviewing our exemptions by state chart will help you figure out your options.
Most exemptions protect particular property. For example, if your state has a motor vehicle exemption, you’ll be able to use the exemption amount to protect your car or another motor vehicle, but not another asset type. For instance, you couldn’t use your leftover motor vehicle exemption to exempt money in your bank account.
To give you an idea about the property types you’ll likely be able to protect, we’ve listed a few of the federal bankruptcy exemptions. Just remember that not all filers can use federal exemptions. You’ll need to check your state exemption laws to determine your exemption options. (These exemption amounts are valid from April 1, 2022, through March 31, 2025.)
You’ll use the same exemptions for Chapters 7 or 13, but what happens to property you can’t exempt with a bankruptcy exemption depends on the bankruptcy chapter you file.
Find out more about keeping property in bankruptcy using exemptions.
A true wildcard exemption isn’t limited to a specific property type. You can use it to exempt any property of your choosing. For instance, you’ll decide whether to use it on your car, money in the bank, expensive artwork, or any other asset you own. You can also split it between multiple assets, or combine it with other exemptions.
Example. Your state has a $3,000 motor vehicle exemption and a $5,000 wildcard exemption. If you own two cars worth $8,000, you can use the motor vehicle exemption to exempt $3,000 of one car and the wildcard exemption to exempt the remaining $5,000 in equity. Without the wildcard, the Chapter 7 trustee would likely sell both vehicles, pay you the $3,000 exemption amount, and use the balance to pay creditors. In a Chapter 13 case, you would have to pay for the nonexempt portion of your repayment plan.
Not all states have wildcard exemptions, but the value will vary for those who do. You’ll also find a wildcard in the federal bankruptcy exemptions.
One of the most costly bankruptcy mistakes you can make is not understanding what will happen to your property. If you aren’t sure, you should consult with a bankruptcy lawyer.
Did you know Nolo has been making the law easy for over fifty years? It’s true—and we want to make sure you find what you need. Below you’ll find more articles explaining how bankruptcy works. And don’t forget that our bankruptcy homepage is the best place to start if you have other questions!
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We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.
Updated April 1, 2022
]]>If you're not familiar with bankruptcy exemptions yet, they're laws that let you keep essential property from creditors. For instance, creditors can’t take your clothing, dishes, couch, or any other household item worth less than approximately $700 in most instances, although the specifics vary by state. Exemption laws protect those items, and more, from creditors both in and out of Chapter 7 bankruptcy.
But bankruptcy exemptions usually don’t protect luxury items or assets with a lot of equity, so you could lose a boat, an expensive car, or even your home in Chapter 7. Whether bankruptcy exemptions will protect everything you own will depend on:
Once you understand how bankruptcy exemptions work in Chapter 7, try our 10-question bankruptcy quiz. It will help you decide whether to file Chapter 7 yourself or hire a bankruptcy lawyer.
When you file a Chapter 7 bankruptcy, the bankruptcy court appoints a bankruptcy trustee to sell your “nonexempt” assets or those things not protected by a bankruptcy exemption to pay your creditors.
However, filing for bankruptcy doesn’t mean that you have to give up all of your property. Bankruptcy exemptions let you keep enough to give you a fresh start after the bankruptcy.
In bankruptcy, the Chapter 7 trustee can’t sell an asset you can protect with an exemption. Keeping property in Chapter 7 bankruptcy will depend on the assets' value and the exemptions you can claim. Because of exemptions, most Chapter 7 filers keep all or most of their property.
It will depend on the state in which you live. Each state has a set of exemptions, and most states require filers to use the state exemptions. However, some states let you choose either the state exemption system or the federal exemption scheme.
The federal system and most states allow you to keep a certain amount of equity in your house and your personal property, such as a car, many retirement accounts, and some wages, although relatively few states allow you to exempt much cash. Also, no matter where you live, your household goods and clothing are usually exempt unless they’re unusually valuable.
You'll find state-specific amounts in Bankruptcy Exemptions by State.
All of the property you own when you file for bankruptcy, except for most pensions and educational trusts, become part of what is known as the bankruptcy estate when you file for bankruptcy. For instance, the following assets will be part of your bankruptcy estate:
The bankruptcy trustee will assume control of the property in the bankruptcy estate throughout your case. What will happen to it in Chapter 7 bankruptcy will depend on whether you can protect it with an exemption.
When you complete your bankruptcy paperwork, you’ll list all of your property and any exemption that you can claim for each item. If the exemption covers the property entirely, you’ll be able to keep it. If an exemption doesn’t cover an item, the trustee will sell it and use the money to pay your creditors.
But sometimes, the situation can be more complicated. The exemption might partially cover the equity in the property. Or, you could have secured debt, such as a car payment or mortgage. In that case, the creditor’s lien on the property ensures that the creditor gets paid first.
Here’s how it works.
Suppose your car is worth $10,000, and your state allows you to exempt $5,000 in vehicle equity. Your outstanding car loan is $5,000. The trustee must pay the lender $5,000, leaving equity of $5,000. Because the bankruptcy exemption would protect all vehicle equity, the bankruptcy trustee would not sell the car.
If, however, your state only allows a $2,000 car exemption, then the trustee could sell your car and do the following with the proceeds:
If the exemption scheme you’re using has a wildcard exemption—an exemption you can apply to any property—you can use it in addition to the motor vehicle exemption that's specifically for protecting vehicle equity.
For a more detailed explanation, read about discharging a car loan in bankruptcy—you'll learn what will happen to the car.
Even if you can’t entirely exempt an asset, the trustee might still choose to abandon it (decide not to take it) if liquidating it won’t net a worthwhile payment to creditors. This usually happens when the property value is slightly higher than the exemption amount after considering sales costs. If the trustee abandons the property, you get to keep it.
If you can't exempt property that you’d like to keep, the bankruptcy trustee might agree to allow you to purchase it at a discount (the asset's value minus the costs and fees related to the sale). You’ll need to demonstrate that you’re using funds that aren't a part of the bankruptcy estate, such as post-filing wages or a loan from a family member or friend.
Did you know Nolo has been making the law easy for over fifty years? It’s true—and we want to make sure you find what you need. Below you’ll find more articles that explain what bankruptcy is and how bankruptcy works. And don’t forget that our bankruptcy homepage is the best place to start if you have other questions!
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We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.
]]>Read on for more information about how to determine whether you can keep insurance proceeds in a Chapter 7 bankruptcy.
When you file for Chapter 7 bankruptcy, everything that you own is potentially property of your bankruptcy estate. That doesn’t mean that you’ll lose everything, however.
Each state has exemption laws that allow you to protect specific assets. Some states allow you to choose between state exemptions and federal exemptions, depending on which set will work best for you.
Many people can exempt all of their property in Chapter 7 bankruptcy—but not always. The Chapter 7 trustee can sell or liquidate nonexempt assets to pay creditors. In most cases, you won’t be able to exempt unnecessary luxury goods, such as a flashy car or boat.
You can learn more about how bankruptcy exemptions work in Bankruptcy Exemptions.
For insurance proceeds that you get because of an accident, there are two issues: when the accident occurred, and whether a bankruptcy exemption covers the proceeds.
You’ll be able to keep insurance proceeds due to a personal injury that occurs after your Chapter 7 filing. You can keep insurance proceeds resulting from a post-bankruptcy accident regardless of whether they’re exempt. They won’t be part of the estate.
By contrast, if you’re injured in an accident that occurs before you file for Chapter 7, any insurance proceeds payable to you are likely property of your bankruptcy estate. You’ll need to take the next step of figuring out if they are exempt to determine if you’ll get to keep them.
Keep in mind that the date of the accident is the key date—not the payment of the insurance proceeds. Only insurance proceeds attributable to an accident that occurred before your Chapter 7 filing are potentially part of your bankruptcy estate.
You can keep insurance proceeds payable to you only up to the amount that your state’s exemption laws allow (or the federal exemption, if your state allows for it). Some states have generous exemptions for insurance proceeds received in a wrongful death or personal injury case. Other states’ exemption laws are more restrictive.
You might also be able to exempt additional proceeds by using a state or federal wildcard exemption—an exemption that allows you to protect any property of your choosing.
The law is somewhat different concerning life insurance. Life insurance proceeds are likely property of your bankruptcy estate if you’re entitled to them as the result of a death that occurred:
State law will determine the amount of the life insurance proceeds exemption you’ll get to claim, or if you can use the federal exemptions. Again, a wildcard exemption might be available to protect these proceeds, as well.
A few other points to keep in mind:
For a broad explanation of exemptions, read Bankruptcy Exemptions: An Overview.
]]>Be aware that some employment investment benefits, such as stock option plans, don’t necessarily qualify for protection. Also, once you receive money from a qualifying pension plan—such as when you take a withdrawal—the funds lose the protection.
(Not sure which type of bankruptcy is best for you? Start with Should I File for Chapter 7 or Chapter 13 Bankruptcy?)
Under the current bankruptcy law, some retirement plans are excluded from the bankruptcy estate. If yours falls under this category, you get to keep it automatically.
Because they aren’t part of the bankruptcy estate, these types of plans don’t come under the control of the bankruptcy trustee, so there is not, technically, a need to claim them as exempt. However, you still must disclose your interest in these accounts on your bankruptcy schedules, and for clarity, many attorneys choose to list them as exempt property as well.
These accounts include:
(Find out more about commonly protected plans by reading Your Retirement Plan in Bankruptcy.)
When you file for bankruptcy, you’re allowed to keep a certain amount of property that you’ll need to work and live, such as some equity in a home and car, household goods, and clothing. Your state decides whether you can use the state exemptions (the laws that tell you which property you can protect) or the federal exemptions.
Some exemption schemes allow you to exempt other types of retirement accounts. If a retirement plan is exempt under the exemption system you choose to use, you get to keep it. Fortunately, most plans will qualify for an exemption under both state and federal exemptions.
Many states provide exemptions for pensions and other retirement plans, including special protections for state employee retirement plans. You’ll need to check the law in your state for those details.
But even when you claim state exemptions, you’ll be entitled to keep any pension or retirement plan that’s excluded from the bankruptcy estate automatically (see above). Also, filers who elect to use state exemptions can use the federal nonbankruptcy exemptions. The federal nonbankruptcy exemptions provide additional retirement protections.
If you use the federal exemptions, you’ll be entitled to claim an exemption for any right to receive payments under any stock bonus, pension, profit sharing, annuity or similar plan or contract on account of illness, disability, age, or length of service to the extent reasonably necessary for your support or the support of your dependents. Limitations might apply if you were employed by someone close to you, such as a relative, when the employer created the plan.
(To learn more about how exemptions work, see Bankruptcy Exemptions.)
Not all plans are safe in bankruptcy. Plans that might not qualify for an exemption include:
For many, a retirement account is the most significant asset a filer owns. Before pursuing bankruptcy, it’s prudent to verify that you won’t lose valuable property by consulting with a local bankruptcy attorney.
]]>The problem is that Chapter 7 bankruptcy doesn’t provide a way to catch up on overdue car payments the way that Chapter 13 does. However, Chapter 7 bankruptcy can stave off the repossession temporarily, which might give you time to make other arrangements.
(Learn how to catch up on car payments in Chapter 13 bankruptcy.)
If you are behind on your car payments and you file for Chapter 7 bankruptcy, your lender cannot legally repossess your vehicle. When you file for bankruptcy, the automatic stay goes into effect and prevents almost all of your creditors from continuing with any collection actions, including repossessions or foreclosures.
Once you file, you or your attorney should immediately notify your lender so it stops all collection actions (the court will notify your lender of the bankruptcy, but it might take a few days or more).
The automatic stay is not absolute. Your car lender can ask the bankruptcy court to “lift” (remove) the stay as to the car loan. If you are behind in your car payments and don’t have a lot of equity in the car, the court will likely lift the stay. If that happens, the lender can continue with collection actions against you, including repossession of your vehicle.
Even though Chapter 7 bankruptcy will wipe out your car loan, it doesn’t have a mechanism for repaying overdue car payments. So filing for Chapter 7 bankruptcy alone won’t help prevent an eventual repossession of the car if you don’t make arrangements to pay. Here’s why.
When a lender agrees to make a car loan, it takes steps to ensure that the loan will get repaid by requiring you to put the car up as collateral for the loan. Collateralizing the loan creates a secured debt.
A secured debt has two parts: (1) a contract that spells out your responsibility to pay back the loan; and (2) a document that gives the lender an ownership (security) interest in the car until you pay off the balance. The second legal instrument creates a lien. Because the lender has a lien attached to your car, if you fail to pay the loan, the lender can enforce the lien by repossessing your car.
If you want to keep the car, the first thing that you must do is determine whether you have any equity in the car, and if so, whether you can protect (exempt) it in bankruptcy. Most states allow you to protect the property that you’ll need to maintain a household and job, including some equity in a vehicle.
You’ll want to take a look at your state’s exemption statutes and see whether the exemption amount will cover the equity—otherwise, you probably won’t be able to keep it. The bankruptcy trustee appointed to your case will sell the car for the benefit of your creditors.
(To learn more, see The Motor Vehicle Exemption: Can You Keep Your Car in Chapter 7 Bankruptcy?)
Although it isn’t easy to keep a car in Chapter 7 bankruptcy when you’re behind on the payments, you have options. Here are a few:
An option that that isn’t used much is redemption. It allows the filer to pay the lender the replacement value of the property. This can work well if the property is worth less than what the debtor currently owes. There are some restrictions, however:
Although this can be an excellent way to go, most bankruptcy filers don’t have sufficient cash to cover the replacement value of the property. However, some lenders will redemption loans. If you’re interested, talk with a local bankruptcy attorney.
(You can find out more by reading Redeeming Secured Property in Chapter 7 Bankruptcy.)
]]>How can I tell if I have nonexempt property? Nonexempt property won’t appear in the exemption list. What will happen to your nonexempt property will depend on the type of bankruptcy chapter that you file.
What happens to nonexempt property in a Chapter 7 bankruptcy? When you file this bankruptcy chapter, the bankruptcy trustee—the court-appointed official responsible for managing your case—will sell your nonexempt property for the benefit of your creditors. The trustee will use the sales proceeds to pay your bills in the order required by bankruptcy law. Priority debt, such as domestic support obligations (child or spousal support) or tax debt, will get paid first. If you don’t have priority debt, or if funds remain after paying it in full, the trustee will pay your nonpriority unsecured debts, such as credit card balances, personal loans, and utility bills.
What happens to nonexempt property in a Chapter 13 bankruptcy? The trustee won’t sell your nonexempt property. Instead, you’ll pay an amount equal to the value of the nonexempt property to your unsecured creditors (creditors whose debt isn’t guaranteed by collateral). For instance, suppose that you aren’t able to exempt a boat worth $15,000 or a timeshare valued at $7,500. You’ll need to pay your unsecured creditors at least $22,500 over the course of your three- to five-year plan.
(For more information about nonexempt property, visit Nolo’s Bankruptcy Exemptions topic page.)
]]>In South Dakota, you'll use South Dakota's homestead exemption to protect some or all of your home's equity. Although some states allow filers to use federal bankruptcy exemptions, South Dakota is not one of them. However, you can supplement South Dakota's state exemptions with the federal nonbankruptcy exemptions.
To help you make an informed choice, we’ve listed the homestead exemption amount below. We’ve also included links to the federal and state exemption lists so you’ll have an easier time deciding whether bankruptcy will work for you.
If you’re married, keep in mind that spouses can double some exemption amounts, but not all. Find out about other filing considerations for spouses.
South Dakota Homestead Exemption |
|
Homestead exemption amount |
All equity in a qualifying property less than one acre in a town or 160 acres elsewhere. |
Can spouses who file a joint bankruptcy double the exemption? |
No. |
Homestead exemption law |
S.D. Codified Laws §§ 43-31-1 through 43-31-5; 43-31-3(1); 43-45-3(1), (2) |
Other information |
Mobile home included; sales proceeds can be protected to a lesser amount (check current amounts); amounts subject to change periodically. |
Where to find other exemptions. |
In South Dakota, homeowners can exempt an unlimited dollar amount of equity in real property, including a home or condominium. However, the South Dakota system does have acreage limitations. If the real property is located within a town, it cannot exceed more than one acre. If it is located anywhere else, it cannot exceed 160 acres.
A mobile home is also covered, but it cannot be larger than 240 square feet at the base. Also, it must be registered in South Dakota at least six months before claiming the exemption.
South Dakota has a few other rules that probably don’t apply to you, but here they are just in case:
Other homestead protections help protect against foreclosure due to delinquent taxes. The amounts protected depend on age and other qualifications.
You can file for bankruptcy in South Dakota after living there for over 180 days. However, you must live in South Dakota much longer before using South Dakota exemptions (if that's the set you choose to use), at least 730 days before filing, to be exact. Otherwise, you’d use the previous state’s exemptions.
But suppose you lived in multiple states during the two years before filing for bankruptcy. In that case, you'd use the exemptions of the state you lived in for most of the 180 days before the two years immediately preceding your filing. (11 U.S.C. § 522(b)(3)(A).) Learn more about filing for bankruptcy after moving to a new state.
We've covered some of the most basic rules you'll encounter when protecting your home in bankruptcy. However, you must also meet other timing and exemption requirements to prevent losing your home. Find out more about keeping your home in Chapter 7 or Chapter 13 or consult a bankruptcy lawyer.
Did you know Nolo has made the law easy for over fifty years? It’s true, and we want to ensure you find what you need. Below you’ll find more articles explaining how bankruptcy works. And don’t forget that our bankruptcy homepage is the best place to start if you have other questions!
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Which Bankruptcy Chapter Should I File to Keep My House? |
What to Consider Before Filing Bankruptcy |
Preparing for Bankruptcy: What to Do With Bank Accounts, Automatic Payments, and Utility Deposits |
Helpful Bankruptcy Sites |
We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.
Updated October 4, 2023
]]>Read on to learn when the bankruptcy trustee might abandon your property, how the trustee abandons property, and what that means for you or your creditors.
After the initial bankruptcy filing, all of the debtor's nonexempt property becomes part of the bankruptcy estate. However, not all property becomes part of the bankruptcy estate. The property that is excluded is called exempt property and the debtor is allowed to keep this property. Examples of exempt property include your homestead (often up to a certain dollar amount), ordinary household goods, pensions and retirement accounts, your vehicle (up to a certain value), clothes, and public benefits such as social security and unemployment. What kinds of properties are exempt and up to what value they are exempt varies from state to state.
(To learn more about bankruptcy exemptions and what property is protected, check out Nolo's section on Bankruptcy Exemptions and Your Property.)
The bankruptcy trustee oversees and administers the estate, and determines which nonexempt property can be liquidated in order to pay back creditors.
If the bankruptcy trustee determines that liquidating particular property in the estate won’t yield much for creditors, the trustee may choose to abandon the property. The trustee may also do this if the property would be hard to sell.
This might happen if, after deducting the costs of sale, the trustee's commission, any amount due a creditor with a lien against the property, and any exemption owed to you, there is nothing or little left to distribute to creditors.
Example. Sara owns a car that has a replacement value of $6,000. She owes $1,500 to her car loan lender and her state allows her to exempt $3,000 in car equity. If the trustee were to sell the car at auction, the trustee would incur costs of about $2,000 in order to pick up, store, and auction off the car, and would collect a $500 commission on the sale. After deducting $1,500 (which goes to the lender), $3,000 (the trustee pays this to Sara), $2,000 (costs of sale), and $500 (the trustee's commission) from the $6,000 sale price, nothing would be left for Sara’s creditors. The trustee would likely abandon the car.
If the trustee abandons the property you keep the property even though it is nonexempt. The trustee may also abandon the property to the lien holder if the lien is greater than the value of the property. For example, if you have stopped making payments on your home and you have a mortgage for $100,000 but the fair market value of the property is $75,000, then the trustee will most likely abandon the property and the lender can proceed with the foreclosure if you are behind on your payments.
In most cases, the trustee will file a Notice of Abandonment to notify the creditors of the intent not to liquidate the property of the bankruptcy estate to meet their debt obligations. By filing this notice, the trustee is formally giving control of the property back to the debtor and any other creditor that may have an interest in the property. Filing this notice is also helpful because it lets all the creditors know where they stand and what to expect from the bankruptcy.
Sometimes the trustee will abandon property without going through the process of filing a Notice of Abandonment. If this happens, section 554(c) of the Bankruptcy Code provides that if the trustee does not affirmatively abandon property, and it is not otherwise affirmatively administered, the property will be deemed abandoned.
Learn more about Your Property & Debts in Chapter 7 Bankruptcy.
]]>For more bankruptcy information, read Filing for Bankruptcy in Idaho. Not only will you find answers, but it includes helpful checklists and a link to an interactive bankruptcy quiz.
You'll use Idaho's state homestead exemption in Idaho. Although some states allow residents to choose between state and federal bankruptcy exemptions, the federal exemptions aren’t available in Idaho.
To help you make an informed choice, we’ve listed the homestead exemption amount below and have included links to exemption lists that apply in your case. Also, spouses can double some exemption amounts if you're married, but not all. Find out about other filing considerations for spouses.
Idaho Homestead Exemption |
|
Homestead Exemption Amount |
$175,000 |
Can spouses who file a joint bankruptcy double the exemption? |
No |
Homestead Exemption Law |
Idaho Code § 55-1003 |
Other Information |
Amounts are subject to change. |
Where to find other exemptions. |
Filing for Bankruptcy in Idaho |
In Idaho, the homestead exemption applies to real property, including your home, condominium, or mobile home. It isn't necessary to occupy the property to claim the exemption. However, if you don’t live on the property, you must record a homestead declaration before taking advantage of the homestead exemption. (Idaho Code § 55-1003.)
You can file for bankruptcy in Idaho after living there for over 180 days. However, you must live in Idaho much longer before using Idaho exemptions, at least 730 days before filing, to be exact. Otherwise, you’d use the previous state’s exemptions.
But suppose you lived in multiple states during the two years before filing for bankruptcy. In that case, you'd use the exemptions of the state you lived in for most of the 180 days before the two-year period immediately preceding your filing. (11 U.S.C. § 522(b)(3)(A).) Learn more about filing for bankruptcy after moving to a new state.
Learn more about this requirement, the current amount of the federal cap, and other important exceptions to homestead exemptions.
You don’t have to file a homestead declaration with the recorder’s office to claim the homestead exemption in bankruptcy. When filing for bankruptcy, you’ll list your homestead exemption on Schedule C: The Property You Claim as Exempt when completing your bankruptcy forms. You can find out about other requirements you’ll need to meet in Your Home in Chapter 7 or Your Home in Chapter 13.
Idaho’s homestead exemption is in the Idaho Code at § 55-1003 on the Idaho Legislature website. Still, the best way to protect your assets is by consulting with a local bankruptcy lawyer.
Did you know Nolo has made the law easy for over fifty years? It’s true, and we want to ensure you find what you need. Below you’ll find more articles explaining how bankruptcy works. And don’t forget that our bankruptcy homepage is the best place to start if you have other questions!
Our Editor's Picks for You |
|
More Like This |
Which Bankruptcy Chapter Should I File to Keep My House? |
What to Consider Before Filing Bankruptcy |
What Not to Do Before Bankruptcy |
Helpful Bankruptcy Sites |
We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.
Updated September 20, 2023
]]>The federal nonbankruptcy exemptions are just like the bankruptcy exemptions in that they help you to prevent certain assets from being taken by the bankruptcy trustee and sold to pay your creditors. But unlike bankruptcy exemptions, they are harder to qualify for and use because they usually require you to be part of a certain occupation or other specialized group.
You can only use the federal nonbankruptcy exemptions if you choose to use your state’s exemption system in bankruptcy (federal nonbankruptcy exemptions are allowed in addition to your state exemptions). So the first step in determining if you are allowed to use the federal nonbankruptcy exemptions is to find out whether your state allows you to choose between the federal bankruptcy exemptions and its own state exemption system.
Many states actually require you to use their own exemption laws and disallow the use of federal bankruptcy exemptions altogether. So if you live in one of these states, then you know you can use the federal nonbankruptcy exemptions. If your state gives you a choice between its state exemptions and the federal exemptions and you choose the federal exemptions, then you may not use the federal nonbankruptcy exemptions. Also, even if you are using your state exemption system, you must still satisfy the specialized eligibility requirements under each nonbankruptcy exemption you wish to use.
Below are some of the most important federal nonbankruptcy exemptions. Unless specified in the exemption, there is no dollar limit to how much you can exempt.
Your retirement benefits are fully exempt if you are one of the following:
Your death and disability benefits are fully exempt if you are a longshoreman, harbor worker, or government employee. Also, if you have received benefits for risk, hazard, injury, or death resulting from war, that compensation is exempt.
Survivor’s benefits are also fully exempt for lighthouse workers, certain judicial employees (judges, center directors, and Supreme Court Chief Justice administrative assistants), and those in the military service.
Learn more about bankruptcy in Nolo's Bankruptcy Center.
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