When you file for a Chapter 7 bankruptcy, you’ll be able to keep property that’s covered by your state’s bankruptcy exemptions. Otherwise, the bankruptcy estate’s trustee would sell any nonexempt property, with the sale proceeds going into repaying your creditors. All states have their own specific bankruptcy exemptions, with some states allowing filers to use federal bankruptcy exemptions. These exemptions, whether set by the state or by the federal government, cover property types such as real estate, vehicles, jewelry, household items, and clothing, among others.
What is the Wildcard Exemption?
According to a bankruptcy attorney in Utah, if you file for a Chapter 7 and your state allows wildcard exemptions, you could apply this to nonexempt property. For instance, let’s say that you have a painting worth $1,500 that you want to hold on to but your state doesn’t have exemptions for art pieces. It does, however, allow wildcard exemptions of up to $4,000. You could use $1,500 of the wildcard exemption for the painting and use the remaining amount of $2,500 for your other nonexempt property.
You could likewise use the wildcard bankruptcy exemption to your other exemptions. For instance, if you have a vehicle worth $6,000 but the motor vehicle exemption of your state is only worth $ 3,000, you could use your wildcard exemption money to add to your motor vehicle exemption.
Take note however that note all states, such as Utah, don’t allow for wildcard bankruptcy exemptions, while some states have exemptions that significantly differ in dollar amount. In other states, the wildcard exemption amount would be sourced from your other property exemptions you don’t have to use for, such that you could use any burial plot or homestead exemption amount to your other nonexempt property. There are some states that enable you to apply this exemption to any property; while others specify exactly which property you could apply it to.
Other Crucial Things to Note
Presently, the wildcard bankruptcy exemption under federal exemptions is worth $1,250 and $11,580 for unused homestead exemption. You could apply these amounts to any type or property. But, keep in mind that you could only be eligible for these federal exemption amounts if your state allows you to choose between state and federal bankruptcy exemptions.