When people are sued and a creditor obtains a judgement lien against them, the creditor is
able to try to collect the money owed by going after the debtor's property. Protection from creditors varies state
to state, but most states allow a certain value of property allowances called "exemptions" whereby debtors would
be able to keep some of their property. If property is exempt, it is protected from creditors. If it is not exempt,
then it is possible for creditors to reach the property.
The drafters of the Bankruptcy Code did not want people to be completely destitute and without
means to reorganize their affairs after emerging out of bankruptcy, so they also allow people to exempt, or protect, some
property. Even though bankruptcy law is federal, it isn't the same from place to place and exemptions are one of the
things that changes depending on where you live when you file your bankruptcy case.
In many cases, the bankruptcy exemption allowances are sufficient to enable a debtor to keep
all of what he or she has. The trustee’s job is to determine what non-exempt property
exists, and if any does then it is the trustee’s job to sell it, or collect the value, so the trustee can pay towards
the debts. If you exceed the "allowance", you may have to give something up or you might be able to "buy it back" and
keep it, either by getting the money from a third party or by filing Chapter 13.
Exemptions can be complicated, and there are many exemptions that are not readily found.
There isn't just one list that you can look at. One reason to hire a lawyer is to be sure that you are using all the
protections that the law gives you to protect your property from creditors. An experienced bankruptcy lawyer
can help you maiximize your exemptions and advise you on how to best protect your property.
