In New York, people experience financial problems with regularity. This could be due to job loss, medical expenses, overwhelming bills, and other unforeseen circumstances. While bankruptcy is legal and an effective way to clear debt, people might fear they will lose all their properties as part of the process. It is wise to be aware of the facts.
Know what property the debtor can retain in bankruptcy
Debtors can keep certain items in bankruptcy. These are known as exempt properties. Homeowners who fear a house might be in jeopardy are protected by the homestead exemption that allows the retention of a property with up to $25,150 of equity. With personal properties like cars, jewelry, and tools that are used for work; health aids; and the loan value of insurance policies, there are certain maximum values that will be protected in a bankruptcy. If the vehicle’s equity maximizes at $4,000, it is exempt. For jewelry, it is $1,700; tools can be valued at up to $2,525. Finally, life insurance can hold as much as $13,400 in its loan value. No health aids can be taken in the bankruptcy.
Spousal support, alimony, unemployment benefits, Social Security, and other aspects of support cannot be taken. If there was a personal injury award, the person can retain up to $25,150. It is important to remember that pain and suffering payments will not be exempt. Most retirement accounts, except IRAs and Roth IRAs, are exempt for up to $1,362,800. Finally, there is the “wildcard” exemption that can be used for certain properties that are not initially categorized as exempt like cash or property that exceeds the allowable value.
Having guidance can help when considering bankruptcy
Debtors might misunderstand what property can be exempted in a bankruptcy proceeding. People could even get into better financial situations by filing for bankruptcy and deciding not to move forward with it. For experienced advice and assistance with how bankruptcy may be a strategy to get into a better financial circumstance and to clear massive debts, it may be beneficial to speak with an attorney from the start.