• By: The Law Offices Of Diane Anderson
  • Published: June 1, 2016

How Do Exemptions Protect Assets In Bankruptcy?

If you are trying to decide whether or not filing for bankruptcy is the best debt relief option for you, let us help. We understand that dealing with overwhelming debt is stressful. We also know that you are probably worried about losing your assets during the bankruptcy process. However, it is important for you to understand that bankruptcy law provides a wide variety of laws that protect many of your valuable assets from being included in your bankruptcy estate. These laws are referred to as “exemptions.”

Both federal law and state laws provide exemptions. In many states, a debtor can choose whether to use federal or state exemptions. In California, however, a debtor is required to use the state law exemptions. Fortunately, California offers two state exemption systems you can choose from to apply to your filing.

Every debtor’s case is unique, so you should confer with a seasoned bankruptcy attorney to determine which exemption system you should use. Generally speaking, a debtor with a significant amount of home equity will want to use System 1. A debtor with a substantial amount of money on the bank or other valuable assets will want to use System 2 due to its wildcard exemption. A California debtor must choose one or the other, you cannot mix and match between the two systems.

Examples of assets that may be protected by exemptions include your home, vehicle, household items, retirement funds and a variety of other types of property. The lawmakers realized that in order for a debtor to obtain a financial fresh start, it was necessary to allow the debtor to emerge from bankruptcy possessing certain assets. If you want to learn more about how the exemptions will protect your assets, contact our office to schedule an appointment.

At The Law Office of Diane Anderson, our lawyer has faced Chapter 7 bankruptcy. She understands the anxiety and fear that accompanies working through this process. But, after coming out on the other side, she started her own law firm and is living a life with less worry and strife. Contact us today to get the help and guidance you need in order to take control of your finances.

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