Bankruptcy exemptions are extremely important when filing for financial insolvency and you must understand what the term
means. A very simple definition is that the, individual or business entities, may list certain assets (as determined by law) to be
protected from seizure by the creditors. A more precise definition is provided below.
Legal Definition of the term bankruptcy:
The administration of an insolvent debtor's property by the court for the benefit of the debtor's creditors. Source: Merriam-Webster's Dictionary
of Law, © 1996 Merriam-Webster, Inc.
Legal Definition of the term exemption/exemptions:
1 : the act of exempting or state of being exempt
2 : one that exempts or is exempted
Source: Merriam-Webster's Dictionary of Law, © 1996 Merriam-Webster, Inc.
Insolvency exception is extremely complex and usually involves a great many terms of 'legalese'. This makes it extremely
difficult for the lay person to grasp precisely what is protected from seizure by the creditors. Thus it is imperative to consult qualified
legal advice prior to making the decision to file for financial insolvency.
Rules protecting certain assets from the creditors, are acquired from the individual states. Due to the variance of the
individual state laws, it is inadvisable to generalize asset protection issues that reach across state borders. There is a wide variation
in exemptions allowed by state, especiallly in the area of real estate. For a list of all states and their allowed exemptions for those
filing Chapter 7, go to http://filing-bankruptcy-form.com/list-of-exemptions.html .
The retention of certain assets will vary, depending on which chapter of the financial insolvency code is chosen.
Furthermore, individual and businesses assets exceptions will vary depending under which chapter the insolvency liquidation will take place in.
Again, proper legal advise should be consulted prior to making the decision as to which filing would be appropriate. For convenience we have
listed the codes directly below.
1. Chapter 7: Liquidation
2. Chapter 9: Reorganization for municipalities
3. Chapters 11 and 13: Reorganization
4. Chapter 12: Reorganization for Family farmers/fishers
The importance of asset protection by 'bankruptcy exemptions' may well be the 'oxygen line' that leads to survival for those
seeking liquidation of debt.