Bankruptcy Memo

Title 11 Exemptions

Kaplan University

To: Supervising Attorney

From: Paralegal

Date: October 15, 2015

Subject: Exemptions

According to Title 11 U.S.C §522 here are the exemptions available to a debtor considering bankruptcy. These exemptions are used to protect a debtor’s property. Once deemed exempt, the property is kept by the debtor and it cannot be liquidated into a bankruptcy proceeding. A debtor may choose to take exemptions at the state or federal level. If this decision takes too long, the federal scheme is used. Specific exemptions are laid out in Title 11 U.S.C. §522(d) as follows:

§522(d) (1) speaks to a debtor’s residence or any real property owned. This property can be loved in by dependent or even be a burial plot.

§522(d) (2) handles $3675 equity in a vehicle or joint filers may claim $3675 each in two separate vehicles.

§522(d) (3) exempts household good such as clothing, furniture, instruments, crops for household use, animals and books. The value on each of these items cannot exceed $575.

§522(d) (4) allows for $1550 jewelry such as wedding rings to be exempted. Items that are more valuable need to be appraised.

§522(d) (5) really sets itself apart as the most important of the federal exemptions because it serves as a catchall for any unused portion of homestead exemption totaling out at $12,725 for property of any kind. This could include extra vehicles, jewelry, and even money in the bank.

§522(d) (6) covers tools of the trade up to a valuation of $2300. For example, if you are a carpenter your hammer, level and saws are exempted. You need them to be able to work.

§522(d) (7) allows a debtor to retain unmatured life insurance policies. This includes term policies with no cash value as well.

§522(d) (8) handles insurance policies that carry a cash value. These would be whole life policies. Insurance companies that have a debt against the cash value of the policy have claim to that debt. This loan amount is excluded...