Can I choose which state's exemptions to use?
No, you must use exemptions from the state where you've lived for the greater part of the 180 days before filing. If you've recently moved, you might need to use your former state's exemptions. If you've lived in multiple states during the 730 days before filing, complex rules determine which state's exemptions apply. This prevents forum shopping for favorable exemptions.
What happens to property I don't exempt?
Non-exempt property becomes property of the bankruptcy estate. In Chapter 7, the trustee may sell non-exempt assets to pay creditors. However, trustees often abandon property with minimal non-exempt value due to sale costs. In Chapter 13, you keep all property but must pay unsecured creditors at least the value of non-exempt assets through your plan.
Can I exempt property I don't own outright?
Yes, exemptions apply to your equity in property, not its total value. If you own a $20,000 car with a $15,000 loan, you have $5,000 in equity to protect with exemptions. The same principle applies to mortgaged real estate or other secured property. Exemptions protect your ownership interest after accounting for valid liens.
Do exemptions protect against all creditors?
No, certain creditors can reach exempt property. Domestic support obligations (child support, alimony) can be collected from most exempt property. Tax liens may attach to exempt property, though collection might be delayed. Criminal fines and restitution orders often pierce exemption protections. Purchase money security interests in specific property override exemptions for that property.
How do joint ownership situations affect exemptions?
Joint ownership complicates exemption analysis. In community property states, each spouse can typically exempt their half of community property. In other states, the type of joint ownership matters. Tenancy by entirety (available for married couples in some states) provides special protection against individual debts. Joint tenants and tenants in common can usually exempt their percentage interest.
Can I claim exemptions for property I expect to receive?
Generally, exemptions apply only to property interests existing when you file bankruptcy. Future interests, unvested rights, or contingent claims typically cannot be exempted. However, some states exempt certain expectancies like wrongful death claims or workers' compensation awards. Inheritances or life insurance proceeds received within 180 days of filing become estate property subject to exemptions.
What if my property values change after filing?
Exemptions are determined based on values at the filing date. If property appreciates after filing, the appreciation generally remains yours in Chapter 7. If values decrease, you cannot claim a larger exemption for other property. In Chapter 13, significant value changes might warrant plan modification, but exemption rights remain fixed at filing date values.
Do I need receipts or appraisals for all property?
While not required for routine household goods, documentation helps support valuations if challenged. Photograph rooms showing furniture condition, keep receipts for major purchases, and obtain appraisals for valuable items. For vehicles, print valuation reports from recognized sources. Real estate typically requires professional appraisal or comparative market analysis.
Can exemptions be lost after claiming them?
Properly claimed exemptions are difficult to lose, but certain actions can jeopardize protection. Concealing assets, providing false information, or transferring property to defraud creditors can result in exemption denial. Using exempt property as collateral post-petition might create new liens superior to exemptions. Criminal conduct involving exempt property can lead to forfeiture overriding exemptions.
How do wildcard exemptions work?
Wildcard or "grubstake" exemptions allow protecting any property type up to specified dollar amounts. Federal exemptions include a $1,475 wildcard plus up to $13,950 of unused homestead exemption. Some states offer similar provisions. Wildcard exemptions provide flexibility to protect assets lacking specific exemptions or to supplement inadequate specific exemptions.