Using Your Wildcard Exemptions In Bankruptcy
Posted on: 27 April 2019
Some people having financial difficulties put off filing for the debt relief they need due to fear of losing property. While some filers could be in a position to forfeit real estate, cars, or other property as part of the liquidation process, most filers never need to relinquish any property at all. As you might know, bankruptcy exemptions can help reduce the value of your property, and that can help it look less appealing to the trustee. Read on to find out more about a particular type of exemption known as the wildcard exemption.
The Liquidation Process
When you ask the bankruptcy courts to discharge your debts, you are allowing your assets and debts to be temporarily controlled by the trustee appointed to your case. The trustee is empowered with evaluating your assets and determining the potential to seize them, sell them, and provide the money to your creditors. Fortunately, most of your assets are protected.
The point of asset seizure is not to leave filers destitute, so each state sets out exemptions. If the homestead exemption in your state lets you keep your primary residence, your home is safe. If it allows a $50,000 homestead exemption and the equity is below or near that price point, your home is safe. Exemptions exist for real estate, vehicles, work-related tools and clothing, and more. Some states add a wildcard exemption of a certain sum that may be applied to any category of assets.
Using a Wildcard Exemption
In the states that offer wildcard exemptions, you can use it on top of another exemption. For example, if your SUV is completely paid for and is valued at $15,000, you can use the $10,000 vehicle exemption and $5000 of the wildcard exemption. You are then free to use any remaining wildcard exemption for other non-exempt property like a second car or further reduce the value of a homestead. Additionally, some states have a wildcard-like allowance that lets filers use the remainder of an unused exemption on other property. For instance, if you are not a homeowner, you can use the homestead exemption to cover any other asset you have.
There are other ways to deal with jeopardized property besides wildcard exemptions. Some of those include options to pay the trustee a sum of money in lieu of property seizure and trading other property. For example, if your home might be subject to seizure but you have nearly enough of an exemption to save it, you might be able to sacrifice a vehicle instead of losing the home.
No matter how much property you are at risk of losing, you won't really know the full picture until you speak to a bankruptcy attorney. Don't put off making this important decision due to fears of forfeiture. Reach out to law firm services today.
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