The objective is to resolve your debt situation so that creditors are treated fairly, while balancing the consumer's right to have a cushion before starting over, to preserve some personal assets, and to have the means to begin again.
Due to these countervailing considerations, the federal bankruptcy law permits the insolvent to exempt certain assets from creditors. Even if the creditor has a security interest in the asset, the debtor may still be able to protect certain property, contingent on the amount owed on the loans and the debtor's equity.
Here are the primary exemptions available under federal law. Please be aware that Connecticut has its own exemptions, which may be a superior option. Generally speaking, you must choose between the federal and Connecticut exemptions. Some states require you to utilize the state exemptions.
You may choose from the federal exemptions, but you cannot combine them in Connecticut. An experienced Connecticut attorney will discuss the advantages and disadvantages of both state and federal exemptions.
Special considerations
Each spouse in a couple filing for bankruptcy receives their own set of exemptions. This means that, in most circumstances, married couples can double the exemption amount if they both have an interest in the property at issue.
Regular adjustments are made to the exemptions to accommodate for inflation and other economic factors. The subsequent modification should occur in 2016. Every three years, adjustments are performed.
The Residence Exemption
This is the exemption applicable to your real estate. It is designed to help you retain your property's equity. It is only applicable to your private domicile - the place where you sleep at night. Personal residences include mobile homes and condominiums in addition to single-family dwellings. In 2015, the federal exemption for a primary residence was $22,975.
This means that if your home is worth $150,000 and you owe $75,000, you would be able to retain it under the Connecticut exemption (provided you continued to make your monthly mortgage payments). If you filed for Chapter 7 bankruptcy and utilized the federal exemption, the trustee could sell your home and pay you $22,975 from the proceeds. If you file for Chapter 13 bankruptcy, the trustee's authority to sell your home becomes more complex. It depends on how you intend to manage your arrears and other debts.
Typically, a real estate appraiser is used to ascertain the value of a home.
Exemptions for individual property
The primary vehicle exemption is $3,675 in value. This implies that if your vehicle is worth less than $3,675, you should be able to retain it regardless of the majority of other circumstances. If your vehicle is worth $10,000 and you owe $7,500, you should be able to retain it as long as you continue to make your monthly payments.
Other exemptions for personal property include:
Accessories - up to $1,550
Up to $2,300 may be granted for the purchase of trade-related materials, such as literature and implements.
Essential health supports for maintaining health and functioning.
Unmature life insurance policies and up to $12,250 in the loan value of a life policy. Policies for credit life insurance are conducted differently.
Household items, furnishings, appliances such as stoves and refrigerators, clothing, literature, your pets or animals, musical instruments, and crops - up to a total of $12,250, but no single item may exceed $575. Keep in mind that the value is what you could receive if you sold the item, not what it would cost to replace it.
Numerous advantages that directly affect your ability to support yourself.
These benefits have no monetary cap. For instance, you have the right to retain all of your social security benefits.
Money received as alimony or child support is exempt from taxation. This means that creditors cannot seize it and the Trustee cannot compel you to use it to pay off your debts.
The following personal privileges are exempt:
Social insurance benefits
Compensation benefits and unemployment benefits
Veterans' entitlement to certain benefits
Disability benefits or illness-related benefits
Government assistance advantages
Compensation because of your injury
Before settling a case with your personal injury attorney, it may be prudent for your personal injury attorney to consult with your bankruptcy or credit attorney to maximize the amount of money you can retain. These are the federal bankruptcy exemptions:
$22,975 in benefits for personal injuries. Check with your Connecticut bankruptcy attorney to see if pain and suffering can be exempted, or if only lost income and medical bills can.
There is no monetary value associated with these damages.
Future funding requirements. This income amount is frequently converted to its present value.
Unjustifiable death benefits because a dependent perished due to the wrongful conduct of another.
Quantities of victim compensation
A worldwide wildcard exemption
This exemption is in addition to the exemptions enumerated above. You can utilize $1,225 to assist in saving any property. For instance, you can add $3,675 to your car exemption to save $4,900 in equity.
Additionally, you may use up to $11,500 of your homestead exemption. This means that if you do not own a residence, you can use this amount to save money, your vehicle, or any other asset. It depends on how much of the homestead exemption you used to protect your residence if you own a home. The federal exemption for a primary residence is $22,975. If you only spent $12,975 to save your property, you can use the remaining $10,000 to save other assets.
Exemptions applicable to Retirement Accounts
Many standard retirement accounts also offer unlimited dollar protection. There are, however, limits on Standard and Roth IRA contributions. The maximum amount is $1,245.475""
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