When filing for bankruptcy, one of the many forms you must complete is Form Schedule C: The Property You Claim as Exempt. Schedule C is where you list all of your legally exempt property that you want to keep.
(To learn about the other forms you must file, see Completing the Bankruptcy Forms.)
You can find the most recent version of Schedule C on the U.S. Court’s website atwww.uscourts.gov/forms/bankruptcy-forms. To learn more about getting the official and other forms, see The Bankruptcy Forms: Getting Started.
While many people worry that they won’t get to keep any of their property when they file bankruptcy, this isn’t true. The law allows you to retain a certain amount of property so that you can live and work (although you don't necessarily get to maintain your current personal lifestyle). Bankruptcy law calls this “exempt” property. If the property is exempt – and you list it properly on Schedule C -- you get to keep it. Be warned, however; if you don’t list it here, the trustee can sell it and give the money to your creditors.
Exemptions also matter for Chapter 13 bankruptcy because they play a role in determining how much you must repay unsecured creditors. Specifically, for every dollar of property that you keep over and above the allowed exemption amount, you must, at a minimum, pay that same amount to your unsecured creditors in your repayment plan. Ultimately, this means that the court only allows you to keep a certain amount of property, and if you want to keep more than that, you must pay for the difference.
(To learn more about how exemptions work, which property is exempt, what exemptions you can use, see ourBankruptcy Exemptions area.)
Determining whether you want to use your state or the federal exemption system (if your state gives you that choice) and how to claim exemptions so that you can either keep the property you really need, or maximize the amount of property you keep, may require some strategizing. Get a good self-help bankruptcy book or consult with a local bankruptcy lawyer.
Here’s the information you’ll need to provide on Schedule C:
Designating which exemption system you are using. In the first section, you have to check one of two boxes. Your choice tells the court whether you will use the federal exemption system (11 U.S.C. § 522(b)(2)) or your state exemption system (11 U.S.C. § 522(b)(3)). Not every state allows you to choose between the federal and state systems, however. In fact most require you to use the state exemptions. Because of residency requirements, some filers won’t qualify to use any state’s system. If that happens, you can use the federal exemptions. To learn more about which exemptions you can use, see Which Exemptions Can You Use in Bankruptcy?
Description of property. In the first column of Schedule C, you must describe each item of property or each asset that you are claiming as either fully or partially exempt (it will only be partially exempt if the value exceeds the exemption amount, and in that case, you will likely have to pay the trustee the difference). Use the same property description you used in Schedule A/B.
Schedule A/B line number. Check Schedule A/B and find the line on which you originally listed the property. In the first column, insert that line number where it says “Line from Schedule A/B.” This helps prevent confusion about the particular property you’re exempting.
Current value of the portion you own. In the second column of Schedule C, you enter the current replacement value of the portion you own and are claiming as exempt. This means that if you’re the only owner, you’ll write down the entire value. If you and someone else own the property on a 50/50 basis, you’ll declare half of the value. Use the information you already provided on Schedule A/B so that the figures are consistent. Also, make sure it matches the value on Schedule D, if applicable.
Amount of exemption you claim. In the third column, you have two choices. If your exemption schedule only allows you to exempt a certain dollar amount, check the first box and insert that number. If, however, the exemption statute allows you to exempt an unlimited dollar amount, check the second box, “100% of fair market value, up to an applicable statutory limit.”
Specific laws that allow exemption. In the fourth column of Schedule C, you’ll provide the statutory citation (the code number for the law that allows for the exemption) that gives you the legal right to exempt that item of property. If you aren’t sure about this, you should consult with legal counsel. To learn more about finding your state or the federal exemptions, see Bankruptcy Exemptions.
Claiming a homestead exemption in excess of $155,675. If you are not using state exemptions that provide a homestead exemption greater than $155,675, check no. Check yes if you are using state exemptions that provide a homestead exemption greater than $155,675 (you’re only likely to do this if you have more than $155,675 of equity in your home). Check yes again if you acquired the property within 1,215 days of filing the petition. In certain situations, your homestead exemption may be capped at $155,675. To learn more see, The Homestead Exemption in Bankruptcy.
This article provides general information only. There are many legal issues involved and important decisions to be made when filing for bankruptcy. You must understand the entire bankruptcy process, learn about the applicable federal and state laws, and determine how those laws will affect your particular situation before you complete the bankruptcy forms. If you want to file bankruptcy without a lawyer, use a good do-it-yourself book like Nolo's How to File for Chapter 7 Bankruptcy to ensure you make well informed decisions about your bankruptcy case.