A common misconception is that you you will lose your home if you file bankruptcy. Nothing could be further from the truth. The important question is how much equity do you have in your primary residence. The equity is the difference between the fair market value and the amount owed. An individual can have $22,975.00 in equity. That number is doubled if you are married and filing jointly. In addition, there is some additional leeway based upon what it would cost for the trustee to sell your home. Sometimes it makes sense to get an appraisal of your property before filing bankruptcy so that you have an accurate calculation of the equity.
Will I lose my car? People frequently ask that question. Generally the answer is "No". The exemption for an automobile is $3675 for an individual ($7350.00 for a couple). In addition, there is a "wild card " exemption which can add even more if necessary. that is discussed below.
The exemption for household goods is $575.00 per item and $12,500.00 total. The total is doubled for couples. It is important to remember that the value of most household goods is considerably less than the purchase price or the replacement cost. Think about what the item would sell for at a garage sale or on Craigslist.
You can exempt jewelry up to $1550.00 per individual. Again, keep in mind the "garage sale" value.
Personal Injury Proceeds
Many people forget that a personal injury claim that has not yet matured is an asset. You can exempt up to $22,975.00 of the net proceeds. There may be a way to exempt additional funds depending upon how the settlement or verdict is allocated. Your personal injury lawyer should be in communication with your bankruptcy lawyer.
The "Wild Card" Exemption
The bankruptcy code provides for an exemption that can be appled to any property. Th wild card exemption is $1225.00 plus half of the unused real property exemption. That is doubled for a married couple. This is a valuable tool to help protect property that might otherwise be exposed to liquidation.
There are many more exemptions available to you and your bankruptcy attorney. For instance, there is an exemption that will protect a 401k and/or IRA. There are exemptions for tools, alimony and support, certain public benefits, etc. Make sure to fully disclose your assets to your attorney so that the exemptions can be properly allocated.