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Friday, February 5, 2010

Exemptions in bankruptcy cases

Chapter 7 “Can I keep my property”

Exemptions are statutory provisions (rules) found in either the United States Bankruptcy Code or the Minnesota State Statutes. They are the real "work horses" in the array of rules that govern how bankruptcy works. Exemptions are the rules that allow people filing bankruptcy to keep their property. Most cases end up being what people involved in the bankruptcy business term a "no asset" case. Which means....all the property a debtor owns is protected and they don't lose anything...but debt. In the typical case you can protect your primary residence, tools of the trade, vehicles, your household goods and furnishings, your paycheck, money on deposit in bank accounts, pensions, tax refunds you may be entitled to but may not have received yet, potential personal injury claims (all up to a particular amount) plus other kinds of property that may not be specifically covered by a particular exemption depending on what you have an ownership interest at the time you file your case and what it's worth. For those assets that don't have a specific exemption that applies to it there's what is known as a "wild card" exemption under the Federal exemptions. How exemptions work and which ones to apply are part of the "art" of practicing bankruptcy law. There is a great deal of interplay between what assets you have and what exemptions should be applied and how to reap their maximum benefit. Everyone brings a little something different to the table and there are actually a lot of variables to consider in a bankruptcy case filing. We look at income, expenses and the household income and reasonable/necessary living expenses. We also do a thorough asset analysis. We'll make sure that we protect your property to the fullest extent of the law. Sometimes we'll go through some strategies to do some pre-bankruptcy filing exemption planning too if that makes sense. Back to the ultimate questions of "Can I keep my property"? Answer....usually not an issue as most people don't lose anything in a bankruptcy filing.

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