How Can Exemptions Protect My Assets in Bankruptcy?

Bankruptcy in DCIf you are considering filing for bankruptcy, you might worry that your property is unsafe. However, you could be able to protect many of your assets by utilizing exemptions. Exemptions protect specific types of property – your car, your house or your wedding ring, to name a few examples. There are specific exemptions as well as “wildcard exemptions,” which can protect any property you own. Exemptions mean that you can stop worrying about losing protected assets.

In most states, you can choose exemptions from state and federal lists. Washington, D.C. works a bit differently. Here, you must either choose exemptions from the federal list or from the District of Columbia list. You cannot mix and match them. The following list details some of the more popular exemptions from the District of Columbia Code.

  • Homestead exemption: This covers any property used by the debtor as a resident. Houses, apartments, even co-ops can be included here.
  • Personal property exemption: This is a more general exemption and can cover many different assets. Motor vehicles (up to $2,575), furniture, clothing, appliances, pets, musical instruments and a few others are covered up to $425 per item and $8,625 total. This exemption can also protect certain accounts, such as college tuition savings accounts.
  • Wages exemption: This can protect a minimum of 75 percent of earned but unpaid wages or pension payments. Nonwage earnings including pensions can be exempted up to $200 per month for the head of household or $60 per month otherwise for up to two months.
  • Pension exemption: This can cover your retirement accounts – 401(k)s, 403(b)s, IRAs, etc.
  • Public benefits exemption: This could cover unemployment, crime victims compensation, Social Security and veterans’ benefits as well as workers’ compensation.

This list is by no means exhaustive. If you’d like to find out whether your assets could be exempted if you were to file for bankruptcy, you should schedule a free consultation with a bankruptcy attorney.

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