What Is a Wildcard Exemption in Bankruptcy?

With a wildcard exemption, you can protect property that's important to you.

If you’re worrying that you’ll lose everything that you own when filing for bankruptcy, rest assured that it won’t be the case. Giving up all of your possessions is not a prerequisite. In fact, if your state has a “wildcard exemption,” you’ll be able to protect the items that mean the most to you.

The particular type of property that you’ll be able to exempt (keep) will depend on where you live. Every state has laws—called exemption statutes—that authorize you to protect things that you’ll need to live and work. For instance, in addition to such basics as furniture, dishes, bedding, and, clothing, you’ll likely be able to keep a particular dollar amount of the following:

  • jewelry
  • spousal and child support
  • a vehicle
  • equity in a residential home, and
  • an ERISA-qualified retirement account.

You won’t find, however, an exemption for luxury items. States don’t have specific exemptions allowing you to protect things such as boats, snowmobiles, vacation homes, or other unnecessary property.

Even so, it’s not a sure bet that you’ll have to give up your sailboat or dune buggy, either. Some states offer residents a wildcard exemption that they can use to protect any property of their choosing up to a certain dollar amount—even items that are obviously not “necessary.”

For instance, if you live in a state that offers a $7,000 wildcard exemption, you could use it to keep your golf clubs, a primitive art collection, your free-standing sauna, or anything else you value highly—up to the authorized amount of $7,000, that is.

(To find out if your state has a wildcard exemption, see Chart: States That Have Wildcard Exemptions in Bankruptcy.)

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