Certain assets that we own are protected under state or federal laws. These assets are called exemptions. An asset is exempt from legal process by virtue of statutes and laws that Congress or the state legislature have specifically enumerated and listed out as being protected from creditors. The purpose of property exemptions is to allow debtors to maintain a certain basic standard of living, and to be able to retain those assets that are necessary in order to function in ordinary day-to-day life. Of course this is a general definition and certain assets might be protected as exemptions simply for public policy reasons.
Basically there are two types of property, real property, and personal property. Real property is real estate and anything that is a fixed or attached permanently to it. Personal property is anything that is not real property. That was easy!
Real property that we use for shelter and as a residence for our families can be claimed as exempt under state homestead exemption laws.
Personal property exemptions consist of protections for motor vehicles, tools of your trade, household goods, clothing, wages, bank accounts, and other miscellaneous and sundry items that the state legislatures across the country have declared in their particular state as protected, or exempt from creditor garnishment, levy, seizure, or attachment.
In order to understand what property you own that might be protected under your state’s exemption laws, schedule an appointment to meet with an experienced bankruptcy attorney as soon as possible.