What Is Exempt Property in Bankruptcy?
- The definition of exempt property varies somewhat from state to state, though the categories of exempt property are very similar. In Arizona, California and Massachusetts, for example, a homestead (the place where you live) is exempt. In Arizona the property, apartment or mobile home where you live is exempt up to $100,000. In California, the exemption limit is $50,000 for single people for a homestead, which includes real property, stock cooperative, community apartment, planned development, condominium, or boat; $75,000 for families; and $100,000 if you are 65 or older or disabled. In Massachusetts, property you occupy is exempt up to $100,000 unless you are over 65 or disabled, in which case the value of the exemption is $200,000.
- Exempt insurance benefits could include, among other insurance sources, health, accident or disability benefits; an annuity or the proceeds from an annuity; life insurance policy and proceeds; fidelity bonds; fraternal unemployment benefits and medical malpractice self-insurance.
- Some pensions could be exempt. These might include private retirement instruments such as IRAs and Keoghs; ERISA-qualified benefits; pensions due county employees, firefighters and peace officers; and pensions due public employees.
- Exempt personal property could include essential appliances, furnishing, clothing and food, burial plots, health aids, jewelry and heirlooms, Bibles and books, cash for heating fuel or utilities, some bank or credit union deposits, works of art and personal injury or wrongful death awards. Arizona details the specific pieces of furniture that are exempt. Exempt personal property in Massachusetts includes two cows, 12 sheep, two swine and four tons of hay.
- Motor vehicles for personal use valued up to a certain (small) amount are usually exempt.
- Exempt public benefits could include Aid to Families with Dependent Children (AFDC); aid to the blind, aged or disabled; students' financial aid; unemployment; veterans' benefits and workers' compensation.
- A minimum of 75 percent of earned but unpaid wages is usually exempt. Among tools of the trade that could be exempt are farm equipment and supplies; teachers' aids; fishers' boats, fishing tackle and nets; uniforms; weapons and tools, equipment and books.