What Property is Exempt from Bankruptcy Court?

 

Introduction

When you file bankruptcy, all your assets become an asset of your bankruptcy estate. In Chapter 7, you get to pull back and keep everything that is not exempt. The Chapter 7 trustee could sell everything that is not exempt to give money to your creditors. In Chapter 13, you keep all of your property, but you must pay your general, unsecured creditors at least as much as the value of the non-exempt property. Remember: if the property isn’t worth much, the bankruptcy trustee does not want it. If it is over-encumbered (you owe more on something than it is worth), the trustee has no use for it. This accounts for most property people own. Joint Debtors (husband and wives who file bankruptcy together) can each claim an exemption.

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Iowa Exemptions

Each Debtor can claim the following as exempt:

  • Wearing apparel: $1,000
  • All jewelry: $2,000
  • Wedding/engagement ring(s): up to $7,000
  • Household goods & furnishings: $7,000
  • One automobile: $7,000 net equity
  • Accrued wages & tax refund(s): $1,000
  • Cash on hand, bank deposits or other personal property: $1,000
  • Interest in payments resulting from wrongful death
    • UnlimitedWorker’s Compensation payments
    • Unlimited Social Security, Welfare and Unemployment benefits
    • Unlimited Qualifying pension plans
    • Unlimited IRA’s – up to $1,000,000

There may be other exemptions available.

Illinois Exemptions

Each Debtor can claim the following as exempt:

  • Homestead: $15,000 of equity
  • Personal property: $4,000
  • Car: $2,400 of equity
  • Personal injury awards: $15,000
  • Pensions: 100%
  • IRA’s: 100%
  • Worker’s Compensation awards: 100%
  • Social Security/Disability payments: 100%

There may be other exemptions available.

Change in the Law for Exemptions: October, 2005

Perhaps the biggest change in the law in October, 2005, was as follows: before the law, you applied the exemptions for the state you have lived in for the greater part of the past 180 days.

Under the amended law, if you have moved from one state to another state any time in the past two years, you have to go back and look at the state where you lived, two years ago, and then determine what the state was that you lived in for the greater part of 180 days before that date.

And, some states do not let you use their exemptions, if you are not a current resident. In those cases, you get to claim a third set of exemptions which are Federal exemptions.

All of this is very complicated. The upshot is that, if you’ve moved from one state to another in the past 2 years, you need to talk to your attorney about how this affects you.