Chapter 7 Bankruptcy Exemptions

Many people are curious about what chapter 7 bankruptcy exemptions are and what they might mean to their particular situation should they choose the option of court liquidation of assets. This legal proceeding is the proceeding most people think of when they think of bankruptcy, but even in this drastic act of debt relief, the debtor can keep some personal property. These are called chapter 7 bankruptcy exemptions and will be different from state to state. There are some federal exemptions for this legal proceeding which include things like retirement benefits for a number of federal workers including CIA employees, Foreign Service workers, railroad workers, social security and veteran's benefits. In addition, survivor's benefits for certain federal judges and other workers are exempt as well as death and disability benefits for all federal employees and longshoremen.

There are many differences from state to state on the chapter 7 bankruptcy exemptions that are allowed from this legal proceeding and so a person considering such a legal action should do their homework and check with various resources for an exhaustive list. However the following information is for general purposes and can be of value to gain a perspective on the exemption process. Many television ads that are sponsored by bankruptcy attorneys often state that someone filing this most drastic form of debt relief will not lose their home. That may or not be true. For example, in Texas the homestead exemption is unlimited as long as the property is no more than an acre in a city or town and two hundred acres for a family outside incorporated limits. In Vermont, only homestead property up to seventy five thousand dollars is exempt and in Missouri only eight thousand dollars is exempt in a homestead. In Oklahoma, a person's homestead is exempted no matter how much value it has.

Chapter 7 bankruptcy exemptions in Louisiana for insurance include all life insurance proceeds except if policy was issued within nine months of the liquidation filing. In Minnesota, life insurance proceeds are exempt only to thirty two thousand dollars, while in New York the only way to keep proceeds is if the policy includes a clause prohibiting proceeds from being used to pay creditors. In many states the pensions of most person's are exempt, but each state may have different interpretations. Jesus made it clear that losing one's property pales with losing something else. "For what shall it profit a man, if he should gain the whole world and lose his own soul?" (Mark 8:36)

It becomes wildly entertaining when considering each state's chapter 7 bankruptcy exemptions for personal property. In California all appliances are allowed to be kept while in Oregon only three thousand may be kept of the total value of furniture, appliances, utensils, household items, radios and televisions. In New Jersey, only a thousand dollars of total value of furniture and household goods. In Texas, 12 head of cattle, two horses or mules are exempt along with a hundred and twenty chickens, while in Louisiana a debtor can only have a single measly cow and five appliances. In South Dakota a debtor can keep two cows and five pigs, twenty five sheep and food to feed them for a year. In one state, a four wheeler ATV for each member of the family is exempt, while in another state only a single motor vehicle worth less than a thousand dollars can remain.

It may be of some comfort to know that most states' chapter 7 bankruptcy exemptions include burial plots. Hawaii allows up to two hundred and fifty square feet of burial space including monument and fencing as being exempt, but Iowa allows a full acre. Iowa also only allows a thousand dollars of clothing to be exempt while other states allow unlimited clothing to be kept. Oklahoma allows all burial plots no matter the sizes and also two saddles and bridles but never mentions horses being exempt. In Minnesota a debtor can keep a church pew that he owns as well as all musical instruments and a Bible. In fact, many states do mention the Bible specifically as one of the first properties included in chapter 7 bankruptcy exemptions from the auctioneer's gavel.

In Nevada, a debtor may keep his cabin if he is a miner, and in Georgia no tools over five hundred dollars in value may be exempt. In Pennsylvania not a single tool of the trade is allowed to be exempt but in Tennessee nineteen hundred dollars worth of tools for one's trade, including books for school teachers or lab equipment for chemists can be exempt. When it comes to wages that are garnished, Connecticut allows seventy percent of wages to be exempt, while in Michigan the head of the household may keep sixty percent of the earned wages. In South Carolina none of a debtor's wages may be garnished but in Alaska, net earnings of three hundred and fifty dollars a week are exempt. In Rhode Island only wages up to fifty dollars a week are exempted while the wages of a spouse are one of the chapter 7 bankruptcy exemptions fully covered under the state's law.

As the reader can see the range of exemptions swings wildly from state to state. But there is one important truth from all of them. Filing chapter seven proceedings is a life altering event. This action affects the whole family quite significantly and the proceedings should not be taken without much counsel from not only financial experts, but also counselors trained to advise in these matters. After all, it's not just about losing property, it's also about losing the connection to things that one has held as dear for perhaps a lifetime.

Add to: File Insurance Business article Teen Photo Images