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What are federal bankruptcy exemptions?

If you are behind on bills you may be receiving calls from creditors, threatening letters and other pressure to pay. Most likely, if you were able to pay you would. But, in many situations people are dealing with such difficult financial situations that they just do not have the income to cover their bills. They may borrow to try temporarily cover the gap, but this temporary measure often leads to further financial difficulties.

By considering bankruptcy, you may be able to get out of the vicious cycle. You can clear many of your consumer debts and get a fresh start. A Chapter 7 bankruptcy is often a good option for consumers. With a Chapter 7 bankruptcy, however, people often worry about losing their personal property. However, you should know that bankruptcy exemptions can often prevent people from losing any property.

There are bankruptcy exemptions at both the state and federal levels. Federal bankruptcy exemptions cover a variety of different personal property. For example, the federal bankruptcy exemptions cover a person's home. Under this exception, a person can keep up to $20,000 in equity in the person's home. Federal exemptions also allow a person to keep up to $3,225 in value in a car and other personal property. This personal property can include clothing, jewelry, retirement savings and home furnishings. Depending on the type of personal property a person wants to keep, there may be limits on the value that a person can exempt.

These exemptions are important to many debtors. However, this post can only provide a glimpse into the bankruptcy code and not specific legal advice. An attorney, on the other hand, may be able to help with more specific concerns.

Source: Findlaw.com, "Bankruptcy Exemptions: Chapter 7," accessed on March 15, 2015

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