The following is a summary of the Bankruptcy exemptions, Section 522 of the Bankruptcy Code. Bankruptcy exemptions are laws that allow a client to proceed through bankruptcy and retain all the property/cash/jewelery which is exempted.
In plain english, a client can keep everything that is protected by the federal exemption laws.
Most Important Exemptions:
1. Up to $20,200 in equity in residence
2. Up to $1,075 in wild card exemption (used for anything)
3. Up to $3,225 in motor vehicle
4. Up to $10,775 in household goods
5. Up to $1,350 in jewelery
6. Up to $2,025 in tools of the trade
7. Up to $10,775 in cash value of life insurance
So, what exactly does all this mean? Well, a client can file bankruptcy and retain
$49,425 in equity, cash and property to help them begin their fresh start.
Not Bad. The federal law is very generous and helps people through tough times either due to unemployment, medical illness, or any other unanticipated life circumstance.
By the way, the federal exemptions also exempt $1,095,000 for each spouse's retirement plan. In case your wondering, the law specifically states that the client can exempt retirement funds to the extent they are in a fund or account that is exempt from taxation under sections 401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code (”IRC”). These IRC sections practically encompass all retirement plans out there (pension plans, profit sharing plans, stock bonus plans, employee anuities, IRAs, Roth IRAs, government deferred compensation plans, plans of tax exempt orgainzations, and certain trusts). The amount they are exempt to are $1,095,000 for each spouse!
Please let me know if I can be of any help.
Stephen M. Dunne, Esq.
Dunne Law Offices, P.C.
1500 JFK Boulevard,
Two Penn Center, Suite 200
Philadelphia, PA 19102
(215) 854 – 6342 office
(215) 205 – 6367 cell
(215) 569 – 0216 fax
dunnelawoffices@gmail.com
www.dunnelawoffices.com
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