Bankruptcy Property
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Filed under Bankruptcy
Debtors can start afresh by filing for bankruptcy. Even when a bankruptcy case is complete, some basic assets are required to carry on with life smoothly. These basic assets are usually exempted by the Bankruptcy Code. Exempted bankruptcy property is not subject to the lender’s claim.[br]
Bankruptcy Property: General Exemption Information
Debtors are required to include all property that they want as exempt in a schedule or bankruptcy documentation. It also includes the property description, the law authorizing the exemption, exemption value and market value of the property. This schedule is used for claim evaluation by the concerned parties, i.e., the trustee and creditor(s). The schedule can be objected to by creditors within 30 days. If they raise any objection they are also responsible to prove that the claim to exemption is improper.
Sometimes a trustee, by mistake, might put certain property in the non-exempt list, which should have been under the exempt list. In this case, debtors need to file a written objection within 15 days.
Bankruptcy Exemption: Properties Exempted
According to federal and state bankruptcy laws, debtors must not be deprived of all their assets or property. Therefore, certain exemptions are available. Bankruptcy property exemption laws vary from state to state with regard to the type and amount of exemption.[br]
The Bankruptcy Code allows debtors to make a choice between federal or state law exemptions. The underlying aim for this move was to attain more uniformity in exemptions. States could have their citizens claim exemptions as per state law and were allowed to structure their ownbankruptcy exemption laws.
The property that debtors use as residence falls under the homestead exemption. However, there are limits to homestead exemption in case debtors use it for illegal purposes, such as delaying or fraud. Under Chapter 7, the trustee can have the house sold to pay creditors, if the homestead exemption does not cover equity. So, it is advisable to consider Chapter 13, which saves your house from foreclosure. However, debtors are required to make regular mortgage payments under Chapter 13.
Federal and state bankruptcy laws also exempt personal automobile. Household goods and furnishings are also exempted in most cases due to their litter resale value. This may include certain trusts, employee annuities, pension, profit sharing and stock bonus plans, Individual Retirement Accounts (IRAs) and 401(k) accounts.