Most people who file bankruptcy own various pieces of property. The types of property can be anywhere from a house to clothes and furniture. The Bankruptcy Code provides a person with a series of exemptions. Exemptions are kind of like shields that allows you to cover up your property. This takes the property off limits from creditors and prohibits them from being able to attach or levy on your property. Exemptions are allowed to be claimed by each individial debtor. That means that a joint filing by husband and wife provides each spouse with a set of exemptions. Both spouses must choose the same type of exemptions. The huband and wife will basically being receiving double exemptions. These exemptions are only up to certain dollar values. However, they are rather generous, so generally no one loses any property.
Pennsylvania provides a person with a choice of exemptions. There are federal exemptions and state exemptions that you can choose from. The federal exemptions are the most generous, so most likely would be the best choice. As an alternative to the federal exemptions, Pennsylvania allows you to select the state exemptions. These state exemptions are rather limited in scope, but on occasion will be the best choice based on your set of circumstances. If you decide to use the state exemptions, then you are also able to use the exemptions provided by federal non-bankruptcy law. The dollar amounts of the federal exemptions are adjusted every three years to take into consideration the changing costs of living. On April 1, 2016, the exemption amounts were last changed. Currently, the federal bankruptcy exemptions include the following categories:
(This exemption can be applied to any interest in real or personal property that is used as a residence up to $23,675.00. The amount that needs to be exempted only includes any remaining value after subtracting for any valid security interests or lins.)
* Motor Vehicle
(This exemption can be applied to an interest in one motor vehicle up to $3,775.00.)
* Household Goods, Household Furnishings, Wearing Apparel, Appliances and Similar Items
(This exemption can be applied to the above mentioned items that are held primarily for personal, family or houshold use of the debtor or the debtor's dependents up to $600.00 in value in one item and a total of $12,625.00.)
(This exemption allows you to exempt up to $1,600.00, as long as held for personal, family or household use of the debtor or a dependent of the debtor.)
* Any Property
( This exemption is oftentimes called the "wild card" and be be applied to any property up to $1,250.00 per debtor, plus up to $11,850.00 of any unsed portion of the homestead exemption.)
* Tools of the Trade
(This exemption can be used toward implements, professional books or tools of the trade that belong to the debtor or a dependent of the debtor up to $2,375.00.)
* Unmatured Life Insurance
(This exemption is to be used for policies owned by the debtor that do not have a cash or loan value.)
*Accrued Dividend, Interest, or Loan Value of Life Insurance
(This exemption is to be applied toward policies that have a cash value up to $12,625.00 and insure the life of the debtor or someone to whom the debtor is a dependent.)
(This exemption is unlimited and may be applied to professionally prescribed health aids for the debtor or a dependent of the debtor.)
* Disability, Retirement and Other Benefits Replacing Wages
(This exemption applies to the debtor's right to receive in the future social security, unemployment, welfare, disability and illness benefits. A debtor may also exempt alimony and support payments, but only to the extent reasonably necessary for the support of the debtor and any dependents of the debtor. Also, most pensions or other employee benefit plans are exempt to the extent reasonably necessary for the support of the debtor and the debtor's dependents. All of these benefits are generally of the type that are already in pay status and are currently being received.)
* Rights to Compensation for Injury or Losses, and Payments for Lost Earnings
(This exemption applies to payments received from various types of injuries or losses. These include 1) crime-victim reparation awards, 2) wrongful death payments of an individual of whom the debtor was a dependent, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor, 3) payments on a life insurance contract that insured the life of an individual of whom the debtor was a dependent, to the extent reasonalby necessary for the support of the debtor and any dependent of the debtor, 4) payments on account of personal bodily injury, but not to include pain and suffering, of the debtor or an individual of whom the debtor was a dependent up to $23,675.00 and 5) payments for compensation of loss of future earnings.)
* Pensions and Retirement Accounts
(This exemeption applies to retirement funds that are in a fund that are exempt from taxation from the Internal Revenue Code. This would include most pensions, profit sharing, stock bonus plans, employee annuities; individial retirement accounts, deferred compensation plans of state and local government and tax exempt organizations. The value of the debtor's amount that may be exempted is up to $1,283,025.)
Oftentimes, what exemptions and the amount of those exemptions available to a debtor will determine what type of bankruptcy to file. If you are able to fully exempt all of your property, then a Chapter7 Bankruptcy would most likely be your best option. If you have significant amounts of property that are not exempt, then a Chapter 13 Bankruptcy would probably be your better choice. In a Chapter 13, the minimum amount that will have to be paid back to unsecured creditors will be the portion of the assets that are unable to be exempted.
The Bankruptcy Code was amended several years ago in the area of exemptions to prevent forum shopping. Otherwords, there was reason to believe that some people might move to another state before filing bankruptcy simply to obtain more generous exemptions. The state exemption law that applies is determined by the state in which the debtor's domicile has been 730 days immediately prior to the filing. If the debtor's domicile has not been located in a single state for the 730 day period, then the state exemption law is that of the state in which the debtor was domiciled for the 180 days preceeding the 730 day period, or in which the debtor was domiciled for the longer portion of such 180 day period than any other place. This location will then determine what state's exemptions that you must utilize. Many states have opted out of the federal exemptions and allow you to only use the exemptions provided by that state. Other states are like Pennsylvania and allow you to choose either the federal exemptions or the state exemptions.
Again, it should be pointed out that very seldom does a person lose any property. The whole idea behind allowing a debtor to exempt various pieces of property is to obtain a fresh start in life and to fully reap the benefits of the bankruptcy discharge. If you are tired of living in financial stress and would like to obtain a fresh start, then call Attorney Rodney Shepherd today at 412-471-9670.