Speak With Colorado Bankruptcy Attorneys Wink & Wink to Learn Which Assets May Be Exempt
You may be wondering what happens to your assets when you file for bankruptcy.
Do all your possessions get taken away to pay off the creditors to whom you owe money?
Are you kicked out of your home and forced to crash at a friend or family member’s place or, worse, live out on the street?
The good news is no.
Filing for bankruptcy can be a smart way to get your financial life back on track if your debt has become too overwhelming. But bankruptcy wouldn’t be a particularly wise decision if it meant you were now homeless and left without possessions.
That’s where bankruptcy exemptions come into play. Bankruptcy exemptions allow you to keep some assets when you file for bankruptcy.
If you’re a Colorado resident considering filing for bankruptcy, it’s time you speak with a trusted bankruptcy attorney near you. For over a decade, Denver’s Wink & Wink have been helping individuals file for bankruptcy and protect as many of their assets as possible.
State vs. Federal Bankruptcy Exemptions
Most states have their own set of bankruptcy exemptions. There are also federal exemptions.
Some states allow you to choose between taking the state exemptions and the federal exemptions. You can’t take both.
The states that currently allow residents to choose include Alaska, Arkansas, Connecticut, District of Columbia, Hawaii, Kentucky, Massachusetts, Michigan, Minnesota, New Hampshire, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Texas, Vermont, Washington, and Wisconsin.
People filing for bankruptcy in Colorado, for example, will not be able to choose between taking the state exemptions and the federal exemptions. If you have resided in Colorado for at least two years when you file bankruptcy, you will have to choose the Colorado state exemptions. If you have not resided in Colorado for at least two years before filing for bankruptcy, you may be forced to use federal exemptions or those for the state you resided prior to moving to Colorado.
Moving within two years prior to filing bankruptcy
The bankruptcy law attempts to stop you from ‘forum shopping’ by moving to a place with favorable exemptions shortly before filing bankruptcy. If you moved within two years, the prior states law will determine whether that prior state’s exemptions will apply or whether you have to use federal exemptions. Most states limit their exemptions to residents, so you will have to use federal exemptions if you file bankruptcy within two years of moving from one of them. However, California, Louisiana, Maine, Missouri, Nebraska, Iowa and Utah will allow you to use their exemptions after moving. If you moved from one of these states, you will likely have too use that state’s exemptions if you file bankruptcy within two years of moving.
If you lived in multiple states in the two years before moving to your current state, the law looks to where you lived between 2-2 ½ years before you file bankruptcy.
What Are Examples of Bankruptcy Exemptions?
In bankruptcy, there are two types of assets: exempt and non-exempt assets.
Exempt assets are assets that creditors may not take when you file for bankruptcy. They are protected.
Most sets of exemptions will have some protection for:
- Your home
- Household goods
- Tools for your main source of income
- Pensions and benefits, such as welfare, unemployment, and social security
- Motor vehicle
- Retirement accounts, such as a 401(k), IRA, etc.
However, it is important to note that there are limits as to how much is exempt. Bankruptcy exemptions don’t mean you can keep any amount of clothing or motor vehicles or household goods, etc.
Non-exempt assets, on the other hand, are assets that are not protected in bankruptcy in any amount. They may be sold off in Chapter 7 bankruptcy to pay off your debts.
- Additional homes (vacation home, cabin, etc.)
- Certain collectible items, such as a stamp collection
- Funds in a bank account
- Stocks or bonds (except for what’s in a retirement account)
- Most tax refunds
You might be wondering whether some of your assets fall into the exempt category or the non-exempt category. That’s why it’s important to speak with a bankruptcy law firm, such as Wink & Wink of Denver, Colorado. They’ll help you learn which assets you may be able to keep in bankruptcy.
Colorado Bankruptcy Exemption Amounts
Here are some of the current state exemptions in Colorado. Note: If you’re filing for bankruptcy jointly with a spouse, the amount doubles in some cases, or you’ll each get the same amount. Speak with a bankruptcy lawyer to learn more.
- Homestead: You can protect up to $75,000 in equity in your home. If you, your spouse, or a dependent family member is disabled or at least 60 years of age, the amount goes up to $105,000.
- Household Goods: You can protect up to $3,000 of household goods.
- Clothing: You can protect up to $2,000 of clothing.
- Jewelry: You can protect up to $2,500 worth of jewelry (rings, watches, etc.).
- Vehicle: You can protect up to $7,500 in equity for up to two vehicles. If you or a dependent family member is 60 years of age or disabled, the amount goes up to $12,500. However, this exemption does not apply to motorhomes, ATVs, or boats.
- Tools of the Trade: You can protect up to $30,000 of things you need for your job.
- Retirement Account: Any amount in your 401(k), IRA, or pension plan is exempt.
- Tax Refunds: You can protect tax refunds to the extent they are attributable to the Earned Income Credit or the Additional Child Tax Credit.
These are just some of the state exemptions, so consult with a bankruptcy attorney for more information.
Contact a Denver Bankruptcy Lawyer Today
If you’re dealing with overwhelming debt and you can’t see a smart way out, it’s time to speak with a trusted bankruptcy attorney. Wink & Wink of Denver, Colorado, can help you learn which assets may be exempt and just how much. Call Wink & Wink today at 303-410-1720, or contact us online.