How to File a Claim of Exemption

When a creditor wins a lawsuit against you, you might worry that they'll take your wages, money in your bank account, or even your car or household belongings. The good news is that both federal and state laws protect certain types of property from judgment creditors. These protections are called "exemptions." If a creditor tries to take something that's protected, you need to act fast. Filing a claim of exemption gives you the chance to tell a court that property like your wages, car, or furniture shouldn't be taken to pay a debt.

In this article, you'll learn how exemptions work, why they matter, and what steps to follow so you can keep what the law says belongs to you.

What Is an Exemption?

All states have laws that protect some of your property from judgment creditors, meaning the creditor can't seize it to enforce its judgment. In most states, your clothing, furniture, personal effects, and public benefits can't be taken to pay a debt. Nor can some of the equity in your car and house, most of your wages, and most retirement pensions.

Exemption amounts change with inflation and vary by state.

When to Claim Exemptions

If a judgment creditor pursues a lien, levy, wage attachment, or assignment order against property that is exempt by state law, you must claim the property as exempt in order to protect it. You might also be able to claim that if the creditor takes the property, you will suffer financial hardship.

Claim of Exemption Hearing

Any time the sheriff or marshal levies against your property, you must be notified. You can request a hearing, which is usually called something like a "claim of exemption" hearing, to argue that it will be a financial hardship on you if the property is taken or that your property is exempt under state law.

If you lose that hearing, you can request a second hearing if your circumstances have changed, causing you hardship (for example, you have sudden medical expenses or must make increased support payments).

File a Claim of Exemption

When your employer notifies you of a wage attachment request or you are notified of a property levy (such as a bank account attachment) or an assignment order, you will be told in writing how to file a claim of exemption—that is, how to tell the judgment creditor you consider the property unavailable. The time period in which you must file your claim is usually short and strictly enforced; don't miss it.

Send the Claim of Exemption to the Creditor

Complete and send a copy of your claim of exemption to the judgment creditor. In some states, you'll also have to serve it on the levying officer, such as the sheriff. The judgment creditor will probably file a challenge to your claim. However, the judgment creditor might abandon the attachment, levy, or assignment order if it's too expensive or time-consuming to challenge you. If the creditor does abandon it, your withheld wages or taken property will be returned to you.

Attend the Claim of Exemption Hearing

If the judgment creditor doesn't abandon the attachment, levy, or assignment order, the creditor will schedule a hearing before a judge. If you don't attend, you'll probably lose. On the day of the hearing, come early and watch the way the judge handles other cases. If you're nervous, visit the court a day earlier to get accustomed to the surroundings. (Or you can have a lawyer represent you at the hearing.)

Show That the Property Is Exempt or That It's Necessary for Your Support

At the hearing, you'll have to convince the judge that your property is exempt or that you need it to support yourself or your family. This is your opportunity to defend yourself from having your wages or other property taken. You must do all that you can to prepare for this hearing if you want to keep your property.

For example, if the creditor tries to take your "tools of trade," which are exempt to a certain value in most states, bring along someone who works in your occupation. A supervisor, union boss, or shop leader can say that you use the items in your job. You'll need to show that the items' value doesn't exceed the exemption amount.

If you have a high income one month, bring in pay stubs to show that you usually make less. Or, if your bills are higher than average, bring copies. Think carefully about your income and financial situation. There might be other creative but truthful ways to show the judge that your property is exempt or necessary to support yourself or your family.

Judge's Ruling on the Claim of Exemption

The judge will listen to both you and the judgment creditor, if the judgment creditor shows up. Sometimes, the judgment creditor relies on the papers already filed with the court. The judge may make a ruling or may set up an arrangement for you to pay the judgment in installments.

Getting Help With Exemptions

If you aren't sure which property is protected or how to prepare for your hearing, talk to a lawyer or seek legal aid. An attorney can help you figure out which exemptions apply in your state, guide you through the claim of exemption process, and represent you at the hearing if needed. Getting legal advice can make the difference between losing your property and protecting the things you need for daily life.