It is important to know that when you file for bankruptcy, you are NOT going to lose everything. On the contrary, the purpose of a bankruptcy is to get a FRESH START, not to start back from square one. It is beneficial to society to allow you to keep enough assets in order to stay on your feet and continue forward. For that reason, certain property is exempt from the bankruptcy estate. Before I get into the amounts and other details, please note that the exemptions may change, so some of these amounts may have changed by the time you are planning to file for bankruptcy.
Probably the biggest exemption is a certain amount of equity in your home. A good Bankruptcy Lawyer in Salt Lake City should be able to help you prevent foreclosure as long as you are going to be able to continue to make payments on your home. If the property is your primary residence, you can exempt up to $20,000 ($40,000) for married couples). You may also exempt up to $5,000 for other real property ($10,000 for married couples). Even if you recently sold your home, you can exempt the proceeds up to those respective amounts, as long as it has been less than a year. You can also have one motor vehicle exempt up to $2,500. NOTE: These amounts refer to the EQUITY in the property, not the value. So if you have a car worth $10,000, and you owe $8,000, then the $2,000 equity in the car is exempt under the motor vehicle provision, although there will still be a lien on your car from the original purchase so you have to continue to make the payments to keep your car.
Tools of the trade (i.e. construction worker tools, if you are a construction worker) are exempt up to $3,500. Additionally, you can exempt sofas, chairs and similar property up to $500, dining and kitchen tables and chairs up to $500, books and musical instruments up to $500, and family heirlooms or property with sentimental value up to $500.
Some property is likely exempt to an unlimited amount. This includes life insurance that has been owned for more than one year, child support (alimony exempt to the extent reasonably necessary), disability benefits, unemployment benefits, veterans’ benefits, etc.
You also get to exempt one of each of the following appliances: washer, dryer, refrigerator, freezer, stove, microwave, sewing machine, carpets in use, 12 month food storage, apparel (not including jewelry or furs), beds for each family member, and a few others.
There are a lot of exemptions. This article does not cover every exemption, but the most common ones. A good Bankruptcy Lawyer in Salt Lake City will be able to walk you through each of these exemptions as well as those which may be specific to you and are not included in this article. If you have questions on specific exemptions that might be available to you then give us a call to setup a free initial consultation.