Filing bankruptcy can be intimidating and unnerving, especially when you aren’t sure if it will mean losing your car or home. There are many myths surrounding bankruptcy and all the requirements and consequences. When you work with an experienced bankruptcy attorney, you’ll be confident that you have the most current, accurate information as you make important decisions about your financial future. We’ll work together to preserve as much of your property as possible so that you can put your debt behind you and continue working hard to rebuild your finances.
State or Federal?
One factor that we use to build an effective case is to take advantage of the exemptions that bankruptcy allows. Exemptions allow you to keep assets and belongings of up to a certain value. The goal of bankruptcy is to give you a new start, not to leave you destitute. Exemptions determine how much of your property you can keep and what may need to be sold by the court trustee, and they are also used when calculating your repayment plan for a Chapter 13.
Each state sets their own exemptions, but in states like Oregon, you may choose to use state or federal exemption guidelines. You may not pick and choose exemptions from the state or federal guidelines to best suit your situation; you need to choose one or the other.
Exemption guidelines are revised from time to time, with the last update to federal exemptions being in 2013. Some assets are always exempt, regardless of their value, while others have a set value. Many of the items that are exempt are entitlements or funds that would be detrimental to your future if you were to lose them. Some of the items that are completely exempt are:
Domestic maintenance income, such as alimony and child support
- Life insurance policies that have not matured
- Life insurance payments that you receive under the policy of someone you were a dependent of
- Benefits such as social security, unemployment, veterans’ benefits, public assistance, and disability benefits
- Retirement accounts,
- IRAs and Roth IRAs up to a cap of $1,245,475
- Health aids that are documented as medically necessary
Some assets are exempt up to a set value, and this is where it’s extremely important to work with a knowledgeable attorney so that you can keep as much of your property as possible. Federal exemptions are currently:
- The homestead exemption: $22,975 in equity of your primary residence. This does not apply to vacation homes or rental properties.
- Motor vehicle: $3675
- Jewelry: $1550
- Aggregate value of household goods, furnishing, appliances, clothing, instruments, animals, crops, etc: $12,250. We’ll work together to assess the value of your property, using resale value, not purchase amount, which allows you to keep much more of your property.
- Tools of your trade and items necessary for your employment, including books: $2300
- Loan value of life insurance: $12,250
In addition to these specific exemptions, the government also allows a wildcard exemption, which may be applied to other assets. The amounts are currently set at $1225 plus $11,500 of any unused portion of homestead exemption.
Let’s Work Together
Don’t let these guidelines overwhelm you. While this may be new information to you, I help people prepare for bankruptcy every day. We’ll work as a team to put your financial difficulties behind you and to make a fresh start with as little loss as possible.