How Do I Use My Exemptions in a Chapter 7 Bankruptcy Case?

As a consumer bankruptcy attorney in Asheville, part of my job is to study the bankruptcy code, and match a client’s available exemptions with their assets.  In over 90 percent of the cases, clients are able to protect all of their assets while discharging their unsecured debt.

Occasionally, non-exempt equity exists.  Just last week, I had clients who were being great parents to their children.  The kids were already moved out of the house, but were still driving cars titled in my clients’ names.  Even after using the $3,500/spouse car exemptions, and some of their $5,000/spouse wildcard exemption, about $2,000 of non-exempt equity remained in their vehicles (after liens were factored in).

Our solution?  We spread out the $2,000 of non-exempt equity over all four cars.  Doing so made the trustee’s job tougher, and he ended up filing a “report of no distribution.”  This means my clients were able to keep all their property.  On those occasions where the trustee sees enough non-exempt property to pursue, we can usually work out a payment plan to “buy back” that equity from the trustee.

If you have questions about bankruptcy exemptions, do not hesitate to contact me.

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