Bankruptcy myth #2- “You can’t keep anything in a bankruptcy” Not true!
August 9, 2010 Leave a comment
This one is also untrue. Exemptions are the property that you are allowed to keep in a bankruptcy. Exemptions have been allowed in bankruptcy for hundreds of years.
We have very generous exemptions in California. There are many separate exemptions for many types of property. All of your furniture and clothes and personal belongings can be put into the household items and personal effects exemption. Even a television and computer can be exempted here.
There are exemptions for your house and your car. There is another for your tools of the trade and one for jewelry. So your wedding ring is safe and so are those tools you need for work. You can keep your retirement too. Your 401k or IRA are safe from seizure as the 2005 law allowed debtors to keep their retirements up to a value of $1 million.
There are other exemptions depending upon the property involved but my favorite is the “wildcard” exemption. This one allows you to save over $23,000 in any type of property you want. Cash, stocks, bonds, real estate, you name it and you can keep it in bankruptcy as long as it’s value doesn’t exceed these limits.
So it’s a fallacy that you can’t keep anything in bankruptcy. California has very generous exemptions which allow most people to keep all of their property in a bankruptcy.