While you are filing for bankruptcy, the term exemptions are encountered by you every day. This is a term that is significant, as it denotes the things that you are allowed to keep when you file for a bankruptcy. There are dual exemptions under the Federal as well as the state legal framework. You are free to choose the structure that affords the best choice. When you declare something exempt, you basically save that asset from coming under the purview of your current debts.
What are the Rules that Apply to Exemptions
The bankruptcy filing can have a set of rules that apply to the federal structure and another set of rules that apply to the state structure. For example, when you file for a bankruptcy in Florida you can apply for an exemption of $1000 only, while the state laws in Texas allow you an exemption of a whopping $30000. Therefore it is mainly the state rules that ascertain the amount you need to pay your creditors when you file for bankruptcy.
‘Wildcard’ is an exemption that is exceptional and you can apply it to any property that you own. It is available in a few states and is not a mandate everywhere. For example if your car is worth $2500 in your state but the value shown in your blue book is only $1000, the remaining $1500 can be compensated on some other asset and used as a Wildcard. This can also be used to save an asset that is not normally exempted.
Standard Rules that Apply to Exemptions
2005 saw the Congress pass a rule that you are not free to move to a state just because it affords a more lenient bankruptcy law. You have to prove domicile in the state where you are applying from for the last two years prior to the filing for bankruptcy. The qualifier is that you have lived in that particular state for 180 days in the past two years. The other option is to go with the Federal exemptions, if the state laws are not favorable.
An attorney will be able to guide you about bankruptcy exemptions and help you save as many assets as you can from your creditors. File smartly to safeguard your hard earned assets. After all it is hard times that you are facing, not a criminal suit!