Personal Bankruptcy Exempt Items
Exempt items are those
that the legal system has determined you’ll need to rebuild your life after
bankruptcy. So they’re the ones the court won’t touch - the ones you get to keep
while the court-appointed trustee will sell off your non-exempt assets and distribute
those funds to your creditors in proportion to the amount owed.
Your goal here is to convert as many non-exempt items as you can into exempt items well
before your day in court. Some items are obvious. Sell off a non-exempt item and buy
clothing and food. You get the idea. Ask your lawyer before you make any moves on this.
We’ll also look at how you can make it more difficult for the trustee to liquidate an
asset in the hopes he’ll abandon the item as unprofitable.
You will probably be allowed to keep inexpensive household appliances providing their
value is less than $200 per item. Some states have other values for particular items such
as refrigerators and ovens. If possible, transfer or sell off any higher priced items more
than a year before filing. Any last minute asset changes may be reversed by the court.
Health aids prescribed by your physician will probably be exempted. This could even
include a swimming pool for someone with leg or foot problems! The amount of the exclusion
is usually very high or even unlimited. A specially equipped car or van would qualify.
Even a normal car that you need to get too and from the doctor’s office for
prescribed medical treatments has been known to qualify.
When you describe your assets on the petition, resist the temptation to artificially
inflate their values. Be as accurate as you possibly can. Also be careful to note any
damage that might reduce an item’s value. The lower it’s value, the more likely
it is that you will be allowed to keep it. If you must make an error on value, it’s
better to state a lower rather than a higher value.
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