When you file bankruptcy, you are required to fill out quite a few bankruptcy papers. Among these are Schedule C, which is a form where you list the property you are claiming should be exempt (meaning you get to keep it).

Both federal and state laws provide exemptions for certain property that a debtor is allowed to claim as exempt. What property is eligible for exemption status varies from state-to-state; however, some states allow you to choose whether to use the federal exemptions or your state's exemptions. If federal exemptions allow you to keep more property than your state's exemptions, then you should opt for federal, provided your state allows it (not all states allow you to choose between federal and state exemptions).

The following states DO ALLOW you to use the federal bankruptcy exemptions if you want: Arkansas, Connecticut, Washington, D.C., Hawaii, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, Pennsylvania, Rhode Island, South Carolina, Texas, Vermont, Washington, and Wisconsin.

The following states DO NOT ALLOW you to use the federal bankruptcy exemptions: Alaska, Arizona, California, Colorado, Delaware, Florida, Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, South Dakota, Tennessee, Utah, Virginia, West Virginia, and Wyoming. If you do not use the federal exemptions (either by choice or requirement), you are also allowed to use the federal non-bankruptcy exemptions.

What property is exempt under federal law?

Remember that only 15 states and Washington, D.C. allow you to use the federal bankruptcy exemptions (see above). These exemptions can be doubled if you are filing bankruptcy jointly with your spouse --

Personal and Real Property:

(1) Household: Up to $425.00 per item not to exceed a total of $8,625.00 (includes animals, appliances, books, crops, furnishings, household goods, clothing, musical instruments)

(2) Jewelry: Up to $1,075.00

(3) Vehicles: Up to $2,575.00

(4) Work tools (implements, books and tools of trade): Up to $1,625.00

(5) Health aides (wheelchair, etc.): Unlimited

(6) Burial plot: Up to $16,500.00 (in lieu of real estate exemption)

(7) Real estate (house, co-op or mobile home): Up to $16,150.00

(8) Any property: Up to $8,075.00 of unused portion of real estate exemption

Wages, Pensions, Recoveries and Benefits:

(1) Wages: None

(2) Wrongful death funds: Amount needed for support

(3) Personal injury funds: Up to $16,500.00 (excluding that for pain and suffering or pecuniary loss)

(4) Lost earnings payments: Unlimited amount

(5) Retirement benefits: Amount needed for support

(6) Alimony / child support: Amount needed for support

(7) Unemployment compensation: Unlimited amount

(8) Veterans benefits: Unlimited amount

(9) Social security benefits: Unlimited amount

(10) Public assistance: Unlimited amount

(11) Crime victims compensation: Unlimited amount

Insurance:

(1) Disability: Unlimited amount

(2) Unemployment benefits: Unlimited amount

(3) Unmatured life insurance: Unlimited amount

(4) Life insurance policy loan value, dividends or interest: Up to $8,625

(5) Life insurance proceeds: Amount needed for support

What property is exempt under state laws?

In general, most states allow you to keep much of your personal property, particularly that which has little or no value. You can even keep collateralized property in certain circumstances (of course, you have to reaffirm the debt).

Personal property includes tools that you use to earn a living (although there are limits on this); your clothing; and all of your household goods. As to your income, usually about 75% of your wages, and all of your unemployment and welfare benefits, worker's compensation, pensions, and insurance benefits are exempt. Most states allow you to double the amount of the exemption if you're married, but not all states, so make sure your state allows this before doing any calculations.

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