| Bankruptcy Exemptions |
 Bankruptcy law protects people or businesses who are no longer able to pay their debts and helps them get a fresh new start. Bankruptcy exemptions are one of the more important aspects of bankruptcy law for debtors. When you file for bankruptcy, your property becomes a part of your bankruptcy estate, which is governed by federal law, and it can be sold to pay your creditors through a process called liquidation.Bankruptcy exemptions, however, determine the portions of your property that cannot be sold to pay off debt. Property that is not exempt will be subject to liquidation. Under federal law, certain qualified tuition programs or educational retirement accounts are exempt. Generally, exempt property includes some or all of the equity in a debtor's primary residence or a businessperson's tools of the trade, such as a painter's equipment. This protects the debtor and a certain amount of his or her personal property or the source of his or her livelihood. The state of California has two separate sets of exemptions, and debtors must choose just one. The state allows for a certain dollar amount for social security benefits, family heirlooms and jewelry, motor vehicles, and a specific amount of commercial property under Section 704.010 et. seq. Section 703.140(b) allows for a certain amount of equity in the primary residence and household furnishings, a set dollar amount for one motor vehicle, and a portion of the funds from settlements or lawsuits. Those who have filed for bankruptcy may not mix and match in order to receive the best bankruptcy exemptions. To qualify for state exemptions, one must live in that state for at least two years before filing for bankruptcy, according to 2005 revisions in federal bankruptcy laws. Others will need to discuss the best course of action with our bankruptcy attorney. Although your bankruptcy exemptions may be one of the most important aspects of your bankruptcy, they can also be one of the most challenging. This area of bankruptcy often combines federal and state bankruptcy laws, and in California, two separate lists entirely. Competent, experienced representation can help you sort out which exemptions are best for your situation to save as much of your property as possible. Source: http://www.courts.ca.gov/documents/exemptions.pdf |