United States Bankruptcy Exemptions
The United States Bankruptcy law provides debtors with certain Federal asset exemptions. These exemptions allow the debtor to keep some basic property.
Federal Bankruptcy Exemptions - April, 2005
- Homestead, real property, including co-op or mobile home, to $18,450; unused portion of homestead to $9,250 may be applied to any property;
- Life insurance payments for person you depended on, needed for support;
- Life insurance policy with loan value, in accrued dividends or interest to $9,850;
- Unmatured life insurance contract, except credit insurance policy;
- Alimony, child support needed for support;
- Pensions and Retirement Benefits • ERISA - qualified benefits needed for support;
- $475 per item in any household goods up to a total of $9,850;
- Health Aids;
- Jewelry to $1,225;
- Lost earnings payments;
- Motor vehicle to $2,950;
- Personal injury compensation payments to $18,450;
- Wrongful death payments;
- Crime victims' compensation;
- Public assistance;
- Social Security;
- Unemployment compensation;
- Veterans' benefits;
- Tools of trade - books and equipment to $1,850;
- $925 of any property plus up to $9,250 of any amount of unused homestead exemption.
The following changes were put into effect on April 20, 2005.
- The exemption for a homestead is limited to $125,000 if the property was acquired within the previous 1215 day (3.3 years). The cap is not applicable to any interest transferred from a debtor's previous principal residence (which was acquired prior to the beginning of such 1215-day period) ;
- The value of the state homestead exemption is reduced by any addition to the value brought about on account of a disposition of nonexempt property made by the debtor (made with the intent to hinder, delay, or defraud creditors) during the 10 years prior to the bankruptcy filing.
- An absolute $125,000 homestead cap applies if either:
- the court determines that the debtor has beeen convicted of a felony demonstrating that the filing of the case was a abuse of the provision of the Bankruptcy Code; or
- the debtor owes a debt arising from a violation of federal or state securities laws, fiduciary fraud, racketeering, or crimes or intentional torts that caused serious bodily injury or death in the preceeding 5 years. NOTE: This limitation is inapplicable if the homestead property is "reasonably necessary for the support of the debtor and any dependent of the debtor."
After October, 17, 2005
If the debtor has lived in given state for at least 730 days, the debtor uses that state for his exemptions. If the debtor lived in more than one state in the two years prior to filing, the the debtor uses the exemptions for the state in which he resided for the majority of the time in the 180 days immediately preceding his bankruptcy filing.
If the debtor is ineligible for any state exemptions based on the preceding rules, that debtor may choose the federal expemptions.
Within the limits established by the Internal Revenue Code, all funds placed into an educational retirement account or qualified State tuition program at least 365 days prior to a bankruptcy filing and designated for a child or grandchild of the debtor are excluded from the debtor's estate. There is a a $5,000 limit on amounts contributed between one and two years before the filing.
will not be taken in the event of bankruptcy.
Employee contributions to ERISA qualified retirement plans, deferred compensation plans, tax-deferred annuities, and health insurance plans
are exempt from seizure.
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