.:What can You Keep?:.
Under any bankruptcy chapter, you are required to list all of your assets. An asset is anything you own. In most cases all of your assets will be exempt. If an asset is exempt that means it cannot be taken to satisfy your debts. In Vermont individuals may claim either the Vermont or Federal Exemptions. If you own a home usually the Vermont Exemptions are more favorable. If you do not own a home, usually the Federal Exemptions are more favorable. The exemption not only protects the property that belongs to you but also the equity that you might have in the property. Equity means the difference between the value of the property and the amount owed on it. For example, a car valued at $5000 with a loan of $4500 has an equity value of only $500.
After you file your case, a Trustee is appointed to review your case. If you have any non-exempt assets , the Trustee will liquidate (sell) them and use the proceeds to pay off your debts according to the priority afforded to them by the Bankruptcy Code.
During and after the closing of the bankruptcy case, your exempted property is protected by law. Some of the types of assets you may protect include (but are not limited to) the following list.
- Your Home and Equity in Your Home
- Cash / Bank Accounts
- Household Furnishings / Appliances
- Clothing / Musical Instruments
- Personal Computers / Books
- Jewelry / Wedding Rings
- Motor Vehicles
- Tools of Your Trade / Professional Books
- ERISA Retirement Plans - e.g. 401k, 403b ..
- Employee Retirement Plans and Pensions
- Education IRA's - 530(b)(1)
- Term Life Insurance
- Cash Value Life Insurance
- Personal Injury Payments
- Other Possessions
- Pets
There is one very important aspect of property exemptions which changed in the 2005 revisions. The exemptions that you may be eligible for are the exemptions set in place by the state in which you lived two and a half years ago (sounds crazy, but it’s true!). For example, if two and a half years ago you lived in Pennsylvania but now live in Vermont and are filing bankruptcy, the Pennsylvania bankruptcy exemptions apply to your case, not the Vermont exemptions. You need an experienced bankruptcy attorney to help you navigate through this process!
