When financial problems become severe, declaring bankruptcy is the common solution. People in debt may overcome their financial distress by taking advantage of bankruptcy protection. Not only do bankruptcies offer debt relief, but they also lead to a fresh start.
If you want to declare bankruptcy, there are some necessary steps you need to take before you get to a bankruptcy discharge. The bankruptcy process presents variations depending on the details of a case.
There are several factors that impact your experience with personal bankruptcy. One of them involves the list of exceptions that you can claim when you file for bankruptcy. Since bankruptcy laws vary from state to state, debtors may have the option to pick between state bankruptcy exemptions and federal bankruptcy exemptions, depending on state law. Take note that the federal government modifies the exemptions amount every three years.
As you can infer, there are states that limit bankruptcy filers to the state exemptions, but Oregon is not one of them. Oregon allows debtors to choose between its own exemptions and the federal bankruptcy exemptions when they file bankruptcy under Chapter 7 or Chapter 13. These are the chapters under which bankrupt individuals commonly file their bankruptcy petition. 7 is the liquidation bankruptcy chapter 7 and 13 is the reorganization bankruptcy chapter.
You need to take into account that there are different types of bankruptcy. For instance, if a joint petition for bankruptcy is filed by a married couple, these exemptions can be doubled according to federal law. This is usually not the case for state exemptions.
What Are the Federal Exemptions?
The federal homestead exemption is used to shield your primary place of residence. It may cover any property used as a principal residence, be it a house, a condominium unit, or even a mobile home. Just like state homestead exemptions, this protection doesn’t extend to investment property. Second homes are nonexempt.
When it comes to federal exemptions, personal property includes exemptions for a motor vehicle, trade tools, and jewelry. Exempt property may also cover items such as furniture, appliances, clothing, and household effects. Federal personal property exemptions have both a limit per item included and an overall limit. Make sure you are careful with your calculations. Incidentally, federal exemptions also protect life insurance policies and health aids among other things.
Wildcard exemptions in bankruptcy cases pertain to a dollar amount that can be applied by the debtor toward any asset. It can be used in conjunction with another exemption to fully cover the value of a certain asset. If the federal homestead exemption can cover more than what you need to protect your home, bankruptcy law allows you to deduct up to a particular amount of the remainder to boost your wildcard exemption.
Reasonably necessary child or spousal support payment may be exempted, as well as many forms of government benefits, including Social Security, unemployment benefits, and all forms of public assistance. There is also an exemption for life insurance payments. Meanwhile, retirement accounts that are exempt from taxation are also covered, although there’s a cap applied to both traditional IRAs and Roth IRAs.
In case you’re receiving payment for damages from a personal injury lawsuit, much of it can probably be exempted in a bankruptcy case. Compensation that you get based on the loss of your future earning capacity can be exempted in bankruptcy proceedings, e.g. being a victim of a crime or the wrongful death of a loved one. You can pretty much keep a capped amount of personal injury damages, save for those addressing pain and suffering or financial losses.
Learn about Your Bankruptcy Options! Contact an Oregon Bankruptcy Attorney Today!
If you’re interested in filing for bankruptcy to get out of debt, it’s best to have a bankruptcy lawyer review your case so that you can be guided on how to best move forward with your bankruptcy filing. Bankruptcy lawyers can advise their clients on everything from filling out bankruptcy forms before filing to starting afresh after bankruptcy.
For assistance on filing bankruptcy, call us at Northwest Debt Relief Law Firm to speak with one of our experienced Oregon bankruptcy attorneys.