|
The allowance for bankruptcy exemptions under applicable
federal and state laws forms the basis upon which property is retained
when filing Chapter 7 bankruptcy. Despite the prevalence of
misinformation, bankruptcy exemptions also play an import role for
conformation of Chapter 13 plans. The best efforts test requires, as a
condition precedent for confirmation, that creditors potentially recover
at least as much under the proposed plan as could be liquidated under
Chapter 7. For current federal exemptions and categorical amounts, see Federal Bankruptcy
Exemptions under Section 522 of The Code.
State Bankruptcy Exemptions
All debtors in Chapter 7 may choose state bankruptcy exemptions
provided by the law of the state in which they resided for the last 2
years. All state bankruptcy exemptions are different. In a few states,
the state legislatures additionally allow debtors to optionally choose
the federal bankruptcy exemptions in lieu of state law bankruptcy
exemptions. These states are known as Opt-In states.
|
14 States Permit An Election Of Federal or State Bankruptcy Exemptions: |
|
|
|
Most states force resident to choose only among the state bankruptcy
exemptions. These states are known as Op-Out states. An exception is
provided by the federal Code however, in circumstances where the debtor
has not lived within the state during the last 2 years. In this event,
the federal exemption list may be elected.
|
36 States Restrict Debtors to Only State Bankruptcy Exemption
Law: |
|
|
|
Values, doubling for spouses, the extent of proceeds from sale are
exempt, and qualification requirements for all state bankruptcy
exemptions develop independently. Gross disparity in values and
procedures reflect each state's assessment of necessity and bias when
balancing competing interests between debtors and creditors.
|
