Debtors in bankruptcy can exempt or protect from the claims of unsecured creditors a certain amount of equity in specified property/assets. Debtors using the “federal exemptions” may exempt the following property/assets.

(Note: You don’t have to figure this stuff out on your own; we offer a free initial consultation and you can schedule that appointment yourself online!)

11 USC § 522(d) – Federal Exemptions
[as of 11-25-13]

(d) The following property may be exempted under subsection (b)(2) of this section:

(1) The debtor’s aggregate interest, not to exceed $22,9751 in value, in real property or personal property that the debtor or a dependent of the debtor uses as a residence, in a cooperative that owns property that the debtor or a dependent of the debtor uses as a residence, or in a burial plot for the debtor or a dependent of the debtor.
(2) The debtor’s interest, not to exceed $3,6751 in value, in one motor vehicle.
(3) The debtor’s interest, not to exceed $5751 in value in any particular item or $12,2501 in aggregate value, in household furnishings, household goods, wearing apparel, appliances, books, animals, crops, or musical instruments, that are held primarily for the personal, family, or household use of the debtor or a dependent of the debtor.
(4) The debtor’s aggregate interest, not to exceed $1,5501 in value, in jewelry held primarily for the personal, family, or household use of the debtor or a dependent of the debtor.
(5) The debtor’s aggregate interest in any property, not to exceed in value $1,2251 plus up to $11,5001 of any unused amount of the exemption provided under paragraph (1) of this subsection.
(6) The debtor’s aggregate interest, not to exceed $2,3001 in value, in any implements, professional books, or tools, of the trade of the debtor or the trade of a dependent of the debtor.
(7) Any unmatured life insurance contract owned by the debtor, other than a credit life insurance contract.
(8) The debtor’s aggregate interest, not to exceed in value $12,2501 less any amount of property of the estate transferred in the manner specified in section 542(d) of this title, in any accrued dividend or interest under, or loan value of, any unmatured life insurance contract owned by the debtor under which the insured is the debtor or an individual of whom the debtor is a dependent.
(9) Professionally prescribed health aids for the debtor or a dependent of the debtor.
(10) The debtor’s right to receive–
(A) a social security benefit, unemployment compensation, or a local public assistance benefit;
(B) a veterans’ benefit;
(C) a disability, illness, or unemployment benefit;
(D) alimony, support, or separate maintenance, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor;
(E) a payment under a stock bonus, pension, profitsharing, annuity, or similar plan or contract on account of illness, disability, death, age, or length of service, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor, unless–
(i) such plan or contract was established by or under the auspices of an insider that employed the debtor at the time the debtor’s rights under such plan or contract arose;
(ii) such payment is on account of age or length of service; and
(iii) such plan or contract does not qualify under section 401(a), 403(a), 403(b), or 408 of the Internal Revenue Code of 1986.
(11) The debtor’s right to receive, or property that is traceable to–
(A) an award under a crime victim’s reparation law;
(B) a payment on account of the wrongful death of an individual of whom the debtor was a dependent, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor;
(C) a payment under a life insurance contract that insured the life of an individual of whom the debtor was a dependent on the date of such individual’s death, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor;
(D) a payment, not to exceed $22,975,1 on account of personal bodily injury, not including pain and suffering or compensation for actual pecuniary loss, of the debtor or an individual of whom the debtor is a dependent; or
(E) a payment in compensation of loss of future earnings of the debtor or an individual of whom the debtor is or was a dependent, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor.
(12) Retirement funds to the extent that those funds are in a fund or account that is exempt from taxation under section 401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code of 1986.

Footnote 1: The dollar amounts are adjusted every three years. See, 11 U.S.C.A. § 104.

Figuring what is exempt can be a little tricky at times, but the above should give you a pretty decent idea of what is exempt/protected under the federal exemptions. The big thing to notice is the “wildcard” exemption available under “(d)(5)”. This wildcard is about $12K for one person and about $24K for married individuals assuming they don’t have too much equity (if any equity at all) in a home. As a result of the “wildcard” exemption, most people should not lose anything to the Chapter 7 bankruptcy Trustee.

A few other things you need to remember:

1. Not all debtors can use the federal exemptions. For information on that subject, you can read my article here.

2. Only unsecured claims get paid from nonexempt estate property. For an explanation of the differences in unsecured, general unsecured, priority unsecured and secured claims, you can read my article here.

3. Finally, you will note that an exemption is claimed in the equity of an asset, not the value (unless you own it free and clear, then equity and value are the same). So, for example, if you have a $20K valued car that you owe $15K against, your “equity” that must be exempt is $5K, not the $20K value.

If you think bankruptcy might be your best options, we offer a free initial consult to review your circumstances. We also have provided information on some of your nonbankruptcy options here. If you have any questions, we are happy to help. Please feel free to contact us.