What can you protect in Bankruptcy? A Guest Post by Attorney Michael Goldstein

Today, we have a guest post by Massachusetts Bankruptcy Attorney Michael Goldstein.

Many people come to a consumer debt attorney to get information about filing for
bankruptcy. When they arrive, one big question that is always asked is, will I loose my
home if I file bankruptcy? The reason for this question is that there is actually a very big
misconception about bankruptcy that a Debtor will loose their house, and belongings to
the Court. This fear is generally unfounded in that under the bankruptcy code 11 USC §
522(D), there are certain exemptions of assets that can not be liquidated.

Every state has its own unique set of bankruptcy exemptions, however, many
states such as Massachusetts and Hawaii, allow Debtors to take the Federal exemptions.
These Federal exemptions are a standard set of rules that govern how valuable an asset
you can keep in bankruptcy. They were created in order to allow a Debtor to reorganize
their finances, without loosing everything and having to start over with nothing. So what
is actually protected?

The most important thing that the rules protect is equity in a Debtor’s house or
condominium. This is where many state exemptions differ greatly from the Federal
exemptions, some states like Massachusetts give more protection, but many give less.
Under the Federal law, you can protect up to $21,625 of equity in your home. However,
the current economy where many homes have no or even negative equity, this exemption
might seem unimportant. However, if you do not use this exemption to protect your
home, you can also apply it to protect just about anything else you want as a wild card.
The wildcard becomes much more important down the road if you have something else
that may not be protected like equity in a car, money in the bank or the right to sue for

Other items that can be protected without the need to dip into the wildcard are:
$3,450 for your motor vehicle. This is where that wild card often comes into play. Many
people have vehicles worth $5,000 – 10,000 and need to protect the car from the Trustee.
You can also protect up to $1,450 for jewelry and $11,525 in value for furniture and
appliances, clothes, books, animals, crops, or musical instruments. You can also protect
things such as tools used to make a living, some life insurance policies and even recovery
from a personal injury case.

The bottom line is simply that just because you want to file for bankruptcy in
order to get fresh start on your finances do not mean you will need to start from scratch
accumulating basic assets needed for every day life. If you are unsure whether your
assets will be exempt from the bankruptcy Trustee, your best bet is to schedule a free
consultation with a local bankruptcy attorney.

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