Like this article? PLEASE +1 it! Evan Signature
Evan Carmichael Top Header
Share for a Cause









What is exempt property and what can you keep with the federal exemptions?

Written by: Dustin Bower

Article Overview: “The purpose of an exemption is to protect a debtor and his family against absolute want by allowing them, out of his property, some reasonable means of support and education and the maintenance of the decencies and proprieties of life.” Poznanovic v. Maki, 296 N.W. 415, (1941)

Free Download - Why Should I Incorporate My Business? By Dustin Bower
Name: Email:

What is exempt property and what can you keep with the federal exemptions?

“The purpose of an exemption is to protect a debtor and his family against absolute want by allowing them, out of his property, some reasonable means of support and education and the maintenance of the decencies and proprieties of life.” Poznanovic v. Maki, 296 N.W. 415, (1941)

Exempt property is not touched by the court in a bankruptcy proceeding. State and federal laws provide a list of all property that can be kept through exemption during your bankruptcy proceeding. In a Chapter 7 bankruptcy, all property that is not exempted will be liquidated in order to pay off creditors, so it is in your best interest to know what can be kept through exemption.

In Minnesota, a person must choose whether to use the Federal or State exemptions. This can be a complicated decision and clients should consult closely with their attorney before filing a bankruptcy petition. The list below includes both Federal (marked with an (f) and State exemptions. Obviously, the choice of whether to use State or Federal exemptions will have a large impact on the property you get to keep.

The following is allowable as a property exemption:

Bible and musical instruments:

- The family Bible, library, and musical instruments

Pew and burial lot:

- A seat or pew in any house or place of public worship

- A lot in any burial ground

Personal goods:

- All clothes (up to a value of $2,400(f)), one watch, utensils, and food

- Household furniture and appliances, a phonograph, a radio, a TV, provided that their total value does not exceed $4,500

- A VCR, linens, china, crockery, educational materials and equipment for children, personal effects, a personal computer and related equipment(f)

- Jewelry up to a value of $1,000(f)

- Wedding rings and other symbols of marriage, up to a value of $1,225

- Professionally prescribed health aids for the debtor or their family(f)

Farm machines:

- Farm machines for a debtor that is primarily a farmer, livestock, farm produce, and standing crops, provided their value does not exceed $13,000

Tools of trade:


- The tools, implements, machines, instruments, office furniture, stock in trade, and library reasonably necessary for the business of the debtor, provided their value does not exceed $5,000($1,500(f))

- If tools of trade and farm equipment are one and the same, then the value cannot exceed $13,000

University apparatus:


- The library and any apparatus owned by a school for the purpose of teaching

Exempt property claims:


- All money received through a court claim on any damaged exempt property

- Any recovery for claims for damages caused by any unlawful taking of exempt property

- Any rights of action for injuries to the debtor or their family

Insurance proceeds and beneficiary associations:


- Life insurance proceeds up to $20,000

- All money, relief, and benefits received from any police department, fire department, beneficiary, or fraternal benefit association

- Interest from any unmatured life insurance contract owned by the debtor, which cannot exceed $4,000

Homestead:

- Real property the debtor is using as a residence provided that it does not exceed $15,000(f) in value

Motor vehicles:

- Mobile home actually in use by the debtor as a dwelling

- One motor vehicle not exceeding $2,400 in value(f), or one motor vehicle not exceeding $20,000 in value that has been modified to accommodate a physical disability

Earnings:


- All earnings not set aside for child support or other garnishments

- Earnings of any minor child - All earnings paid to debtor within 6 months of being released from prison

- All earnings within 20 days of being deposited in a bank

- All earnings paid to debtor within 6 months of returning to work if the debtor has received welfare in the past

Public assistance:

- All relief received based on need

- All earnings of a debtor receiving need-based relief

Employee benefits:


- All employee benefits payable due illness, disability, death, age, or length of service up to a value of $30,000

- Retirement plans with a value of not more than $1,000,000(f) - Veterans’ benefit(f) - Disability, illness, or unemployment benefit(f)

- Support payments from alimony(f)

Related Articles
  Good News For Bankruptcy in New York
  What is Regulation D?
  What is the difference between a Chapter 7 and a Chapter 13 bankruptcy?
  Federal Requirements
  Illegal Workers Protected by FLSA

Home > Legal > Dustin Bower > What is exempt property and what can you keep with the federal exemptions
Article Tags: bankruptcy petition, bankruptcy proceeding, bible library, burial ground, chapter 7 bankruptcy, complicated decision, exempt property, family bible, federal exemptions, household furniture, maki, personal effects, personal goods, pew, phonograph, proprieties, public worship, related equipment, state exemptions, wedding rings

About the Author: Dustin Bower
RSS for Dustin's articles - Visit Dustin's website

Dustin Bower is the founder and owner of Bower Law Office, PLLC, http://www.bowerlawoffice.com. Dustin has experience in a wide range of legal areas, including bankruptcy, child welfare and advocacy, administrative law, criminal law, unemployment law, corporate law, and business litigation. Dustin's most recent legal experience involved working with several large engineering and construction firms responsible for the 35W bridge redesign and construction. Dustin is also very active in the non-profit community. He currently volunteers through Minneapolis Achieve, a program that puts professionals in contact with at-risk inner city high school students.

Click here to visit Dustin's website
Dashed Line

More from Dustin Bower
How to Properly Prepare and File for Bankruptcy
CREDIT SCORES WHAT AFFECTS IT AND HOW IT AFFECTS YOU
Why Should I Incorporate My Business
What is an automatic stay
BANKRUPTCY TRUSTEES WHO ARE THEY AND WHAT DO THEY DO


Related Forum Posts
Re: Tie the equity up! Re: Tie the equity up! - [quote="BizLoanz4u":3u3uqyzg] Anyway- Now, In the state of Texas you cannot use your primary residence for collateral (It's a state law). If you own other property, like investment/ rental property or even vacant land, it's better to use that property rather than a primary residence for collateral. [/quote:3u3uqyzg] Sad that the government has to say not to risk your home, but I hope that helps people avoid a costly mistake and especially people with a family who needs a roof over their head. Chris
How Well Protected Are The Patent Holders? How Well Protected Are The Patent Holders? - Intellectual property laws vary from jurisdiction to jurisdiction. And it is such that the acquisition, registration or enforcement of the rights must be pursued or obtained separately in each territory of interest. Intellectual property in law is a general term for various legal entitlements. The holder of this legal entitlement is generally entitled to exercise various exclusive rights. Intellectual property laws are designed to protect different forms of subject matter, in this case a Patent. A patent may be granted for a new, useful, and non-obvious invention, and gives the patent holder an exclusive right to commercially exploit the invention for a certain period of time, typically 20 years from the filing date of a patent application. Patents, trademarks, and designs rights are sometimes collectively known as industrial property, as they are typically created and used for industrial or commercial purposes. Various schools of thought are critical of the term “intellectual property”. Some characterise it as intellectual protectionism. From the perspective of economics, intellectual property is a temporary monopoly on the use or exploitation of that Patent, supported by legal enforcement mechanisms. There is a debate going on every where that intellectual property laws truly operate to confer the stated public benefits, and whether the protection they are said to provide is appropriate in the context of innovation derived from such things as traditional knowledge and folklore, and patents for software and business methods. Manifestations of this controversy can be seen in the way different jurisdictions decide whether to grant intellectual property protection in relation to subject matter of this kind, and the divide on issues of the role and scope of intellectual property laws. Most exclusive rights are the right to sue an infringer, which has the effect that people will approach the patent holder for permission to perform the acts to which the patent holder has exclusive right
Website value via Cap-Rate Website value via Cap-Rate - Evan, no I haven't seen it used for websites as it struck me as a way of determining value when I look at Rental properties. I'm sure if you look at the basics of the formula you can figure the numbers you'll need to extract from your Web metrics. I know in the rental market you want to look for a property that has a Cap rate of 10%. In the Toronto market you'll be lucky to get 7%. It's a quick way for an investor to determine if a property is a good buy at first glance and then go deep into the numbers reported. short answer: no I haven't seen it being used to determine website value.
Re: Invest in Real Estate or Stocks? Re: Invest in Real Estate or Stocks? - If you have a modest amount to invest then starting out in property is better, preferably in a field and location that you know well. If you can afford to invest in stocks such that no single investment amounts to more than 5% of the total amount invested AND * You are well diversified both geographically and in stock type * You have an exit strategy (a stop loss plan) that you stick to * You have an entry strategy (research) ... then I'd suggest 40% stocks, 40% property, 20 safe and easily accessible investments...
Re: Tie the equity up! Re: Tie the equity up! - [quote="ChrisH":1q68f9qn][quote="BizLoanz4u":1q68f9qn] Anyway- Now, In the state of Texas you cannot use your primary residence for collateral (It's a state law). If you own other property, like investment/ rental property or even vacant land, it's better to use that property rather than a primary residence for collateral. [/quote:1q68f9qn] Sad that the government has to say not to risk your home, but I hope that helps people avoid a costly mistake and especially people with a family who needs a roof over their head. Chris[/quote:1q68f9qn] This question seems to resonate even more, two months down the line, with the vast spate of foreclosures going on right now. It's interesting (and frightening) how the whole world interconnects right now. The sub-prime borrowers who are in trouble right now are only 6% of all peple with mortgages...yet lenders are toppling because of them. You'd think financiers who've been in the banking business for decades would have seen what could happen with adjustable rate mortgages, dodgy loans, etc., but it doesn't seem as if people ever learn...


Recommended Article for You close

  Good News For Bankruptcy in New York

Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.



Featured Article


Bottom Footer
Share for a Cause












Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!
Name:
Email:
Popular Articles

What is the bottom line to you?

Providing Feedback

Steps For Starting A Small Business

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.