Filing for bankruptcy is never an easy decision, however, there are times where doing so is the only way to deal with crushing debts. For example, many people file for bankruptcy because they have overwhelming credit card or medical debts that are impossible to pay off. Other people file for personal bankruptcy because they are unable to pay their monthly mortgage payments on time.
People can solve these financial problems by filing for personal bankruptcy protection. When people file for bankruptcy protection they ask a US federal bankruptcy court to legally discharge their debts. They do this by petitioning the court for protection using either Chapter 7 or Chapter 13 of the US federal bankruptcy code.
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Bankruptcy lawyers can help people protect certain types of personal property from creditors by helping clients understand how to use personal property exemption laws in their particular state to their advantage. These laws vary from state to state. However, they can help clients protect personal items that could otherwise be taken during bankruptcy proceedings.
For example, the state of Wisconsin as well as Washington DC have unique personal property exemption laws that allow residents in those areas to exempt many personal items from creditors.
For instance, Wisconsin allows residents to exempt many types of personal property from creditors. For example, homeowners may protect up to $40,000 in equity in their homes. Single Wisconsin residents may also protect up to $2,750 in equity in their vehicle and at least $9,300 worth of household goods. These laws also allow married couples living in Wisconsin to double these last two exemptions. As a result, many Wisconsin residents can protect the majority of their personal property from creditors if they take full advantage of these laws.
On the other hand, Washington DC residents also have unique personal property exemption laws. For example, Washington DC residents may keep up to $8,625 in household items. These items include dishes, home furnishings, family heirlooms, and clothes. They may also fully exempt qualifying retirement plans, unemployment benefits, and the cash value of most life insurance policies.
Washington DC residents may also exempt up to $2,575 of the equity in a personal vehicle. This exemption often helps many people filing for bankruptcy protection keep an older vehicle because many older vehicles are worth less than $2,575. Furthermore, Washington DC residents may also exempt up to $1,625 worth of tools that are used in a trade.
Finally, Washington DC residents also have a wildcard exemption that allows them to protect up to $850 worth of personal assets. These assets can include additional equity in a vehicle, collectible items, and certain household items. Consumers who need help with need help understanding these personal property exemption laws should consult a local bankruptcy lawyer for more information.
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