Q:  What is an exemption?

A: An exemption is a law that protects certain real and/or personal property from collection by creditors. Exemptions vary by state and may change throughout the legislative year.

Within the context of bankruptcy, exemptions remove property from the bankruptcy estate. The exempted property cannot be taken by the trustee assigned to the bankruptcy case unless court approval is obtained.

The exemptions applicable in a given case depend on domicilary requirements set forth in 11 U.S.C. §522. A debtor may be able to elect federal exemptions or state exemptions.  Residents of Nevada may not be entitled to claim Nevada exemptions.

Only a licensed attorney is qualified to determine which exemptions apply. Bankruptcy petition preparers and paralegals are prohibited by law from giving legal advice.

Extreme care should be exercised in selecting the appropriate exemptions. If you fail to properly exempt your belongings, the trustee assigned to your bankruptcy case may collect and liquidate the ‘non-exempt’ property in order to make a distribution to your creditors. In other words, you could lose some or all of your belongings based on what exemptions you claim. 

Review also Declaration of Homestead to protect equity in the debtor's primary residence. 

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