There are a wide range of assets that a trustee can seize when an individual (or couple) file for bankruptcy. Many people ask about exemptions, and while they do exist, it is generally wrong to look at an item to see whether or not it’s exempt. In most states, and for most assets, it is not the asset itself that is exempt. Rather, it is a certain value. A good example of this is a personal vehicle. In most states, you can claim a sum – for example, $5000 – for a personal vehicle. If your share of the vehicle is worth more than that, then the trustee could seize and sell that vehicle.
When considering a ‘share’ of an asset, we are talking about how much you own – for example, a car may be worth $10,000, but if you still owe $8,000, then your share is only $2,000. This is often referred to as equity. The bankruptcy trustee would then look at how much equity you have in your car, your home (if buying or owning), and any other assets in your possession. This value is then compared to a set exemption value to determine whether or not the asset is exempt, or available for liquidation (seizure and sale).
There are some assets that are safe from seizure irrespective of their value. Most retirement plans are safe, as are burial plots for yourself and your immediate family. Wedding bands are exempt, however, engagement rings are generally not. While most assets have a set value, most states also include a wildcard amount that can be applied to any asset. If your engagement ring exceeds the amount allowable for personal jewelry, then you may be able to use part of that wildcard amount to cover your engagement ring.
Determining which assets are safe can be difficult when it comes to bankruptcy. A bankruptcy lawyer is well versed in bankruptcy law and your state’s specific legislation. If you have any doubts about your assets, consult one of those bankruptcy lawyers.
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