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What is Exempt Property?
By plrprousers | April 10, 2009
Once a debtor has qualified to file Chapter 13 or Chapter 7 bankruptcy under the new bankruptcy laws, his or her property and assets fall under the supervision of the bankruptcy court. At the time of filing, Erie, PA bankruptcy lawyers will classify your property as exempt or non exempt. The “exempt” status of an asset signifies that the debtor can keep that asset.
Exempt property is defined differently from state to state, but generally it is property that cannot be seized by creditors or the bankruptcy court. Erie bankruptcy lawyers will know these statues for Pennsylvania. Most states exempt such things as health aids, like contact lenses and walkers. Things of a personal nature, such as toothbrushes and hair dryers, are considered “personal effects” and are considered exempt in most states. Ordinary furniture and clothing is usually considered exempt without the court assigning a value.
States can also set limits on the amounts of exempt property that can be claimed. For example, the value of clothing, furniture or a car is exempt up to a set limit. Any equity in these assets over that limit is considered nonexempt and the court can ask that this equity be made available to creditors in cash.
In most states, the following assets are typically considered exempt:
• Unpaid wages
• Some of the equity in a residence.
• Some of the equity in a vehicle.
• Life insurance value
• Tools of a trade or profession, usually up to a set limit
• Reasonable necessary clothing
• Reasonably necessary furniture
• Household appliances
• Jewelry, up to a set limit (usually a few hundred dollars)
• Pensions
• Public benefits
By the time a debtor reaches the point of filing bankruptcy, especially Chapter 7, most of their assets are either exempt or useless to the court. In this case, even though property may be nonexempt, the trustee may elect to “abandon” the property, meaning that the debtor may keep it, unless is it security for a debt. Also, if property is determined by the trustee to be too cumbersome to sell, the trustee may abandon this property as well. Erie, PA bankruptcy lawyers can offer further advice if needed.
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