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How Does the State Where You Live Affect Asset Exemption in Bankruptcy?

When filing bankruptcy, debtors list exempt assets in their schedules and Statement of Financial Affairs.  Exempt assets are not subject to liquidation to pay unsecured creditors during a Chapter 7 bankruptcy.  However, which assets are exempt during bankruptcy largely depend on state law, because state property laws determine asset exemption―unless the debtor lives in a state where residents can choose between federal and state exemptions for bankruptcy filing.

To give an idea of how greatly exemptions vary from state to state, here are some examples from a few states:

  • Alabama. Real property or mobile home $5,000 exemption (double for married couple and property not to exceed 160 acres); 75 percent exemption of earned, unpaid wages; $3,000 of personal property exempt (double for husband and wife); no automobile exemption
  • Alaska. Homestead exemption $54,000 (same total for joint owners) under Section 09.38.010(a); net weekly earnings exempt up to $350; $3,000 exemption for one vehicle if total value does not exceed $20,000; personal property exemption up to $3,000 (clothing, household goods, books, musical instruments); $1,000 jewelry exemption; $2,800 professional books and tools
  • Arizona. Homestead exemption $150,000; 75 percent of earned but unpaid weekly net earnings exempt; $5,000 automobile exemption ($10,000 if disabled); household furniture and appliances $4,000 exemption and $500 clothing; exemption for food and fuel up to 6 months
  • Florida. Unlimited value for homestead exemption if property does not exceed one half acre in municipality or 160 acres in non-municipal area; 100 percent of wages for heads of family exempt up to $500/week for up to six months; $1,000 vehicle exemption; in lieu of homestead exemption a $4,000 personal property exemption allowed

Because statutes are subject to exemption adjustments based on inflation or cost-of-living changes, it is best to consult a bankruptcy attorney when determining asset exemptions.

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