How do I exempt my assets in a Chapter 7 Bankruptcy?

Once you have listed all your assets and determined how much, if any, equity you have in them, you need to exempt your equity to keep the property in a Chapter 7 Bankruptcy.

For every state, there are two sets of exemptions. In the Bankruptcy Code, there are the federal exemptions. Most states, however, have opted out of using the federal exemptions. In states that did not opt out, you can choose to use either the federal or the state exemptions based upon what works better for you. In Myeasy7.com, we use the federal exemptions automatically for those states. If you want to explore your options in using the state exemptions, you will have to talk with an experienced Bankruptcy attorney.

For states that have opted out of the federal exemptions, you must use the state exemptions exclusively. In those states, Myeasy7.com automatically allows you to pick the exemptions you are eligible for.

The exemptions exist because Congress understoood that people need certain things to survive, even after Bankruptcy. For example, you need clothing, a vehicle, a place to live, etc… As a result, exemptions allow you to protect certain reasonably necessary assets up to a reasonable value. For example, you can keep a vehicle, but might not be able to keep a Rolls Royce.

Furthermore, the federal exemptions allow you to keep any asset you choose up to approximately $10,000 – as long as you have at least that much money left available in your exemption for your home. This “wildcard” exemption is what makes the federal exemptions particularly attractive.

Looking at each asset in which you have equity, you then need to determine what exemption makes the most sense. For example, the federal exemptions and most states include and exemption for motor vehicles, one for clothing, one for household goods and furnishings, one for 401ks and IRAs, one for your home, etc… Unfortunately, each state’s exemptions varies. For example, in some states, you can exempt your home only up to a certain value of equity. However, Florida and Texas allow you to fully exempt all equity in your home, no matter how much it is. In Myeasy7.com, we allow you to experiment with the exemptions to figure out how best to protect your property.