When one files Chapter 7 Bankruptcy, all of the debtors’ assets become part of the Bankruptcy Estate. This does not mean that the debtor will lose their assets. In fact, most of the debtors we have represented over the past 27 years did not lose any assets.
Certain assets can be exempt from the Bankrupt Estate. The debtor can elect to choose the Federal Bankruptcy exemptions or their State exemptions. Each has advantages that the other doesn’t. The type of assets a debtor has and its’ value will determine which exemption is best.
It is critical to consult with a Connecticut Bankruptcy Attorney to protect your assets when filing bankruptcy or if you are involved in any collection situation.
Below are a list of the Federal Exceptions and the Connecticut State Exemptions. These exemption values change from time to time, so you will need to check the values at the time you would be looking to claim an exemption.
Serving Danbury, Connecticut and all of Fairfield and New Haven Counties.
Please Note that the values are per person. A married couple filing jointly can double the exemption if they both own the asset. The exemptions apply to the equity in the asset. The Bankruptcy Trustee is only interested in the equity. For example, if a debtors’ residence has a fair market value of $200,000 and there is an outstanding mortgage balance of $150,000, the Trustee is only interested in the $50,000 of equity. A married couple who own the home jointly can claim a Federal exemption of $47,350 or a Connecticut exemption for the full $50,000. If only one debtor owns the property, that debtor would only be able to exempt $23,675 under the Federal Bankruptcy Exemptions, but would still be able to exempt the full equity of $50,000 using the Connecticut Homestead Exemption.
Federal Bankruptcy Exemptions
- The debtor’s aggregate interest, not to exceed $23,675 in value, in real property or personal property that the debtor or a dependent of the debtor uses as a residence, in a cooperative that owns property that the debtor or a dependent of the debtor uses as a residence, or in a burial plot for the debtor or a dependent of the debtor.
- The debtor’s interest, not to exceed $3,775 in value, in one motor vehicle.
- The debtor’s interest, not to exceed $600 in value in any item or $12,625 in aggregate value, in household furnishings, household goods, wearing apparel, appliances, books, animals, crops, or musical instruments, that are held primarily for the personal, family, or household use of the debtor or a dependent of the debtor.
- The debtor’s aggregate interest, not to exceed $1,600 in value, in jewelry held primarily for the personal, family, or household use of the debtor or a dependent of the debtor.
- The debtor’s aggregate interest in any property, not to exceed in value $1,250 plus up to $11,850 of any unused amount of the exemption provided under paragraph (1) of this subsection.
- The debtor’s aggregate interest, not to exceed $2,375 in value, in any implements, professional books, or tools, of the trade of the debtor or the trade of a dependent of the debtor.
- Any unmatured life insurance contract owned by the debtor, other than a credit life insurance contract.
- The debtor’s aggregate interest, not to exceed in value $12,625 less any amount of property of the estate transferred in the manner specified in section 542(d) of this title, in any accrued dividend or interest under, or loan value of, any unmatured life insurance contract owned by the debtor under which the insured is the debtor or an individual of whom the debtor is a dependent.
- Professionally prescribed health aids for the debtor or a dependent of the debtor.
The debtor’s right to receive–
- a social security benefit, unemployment compensation, or a local public assistance benefit;
- a veterans’ benefit; a disability, illness, or unemployment benefit; alimony, support, or separate maintenance, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor; a payment under a stock bonus, pension, profitsharing, annuity, or similar plan or contract on account of illness, disability, death, age, or length of service, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor, unless–
- such plan or contract was established by or under the auspices of an insider that employed the debtor at the time the debtor’s rights under such plan or contract arose; such payment is on account of age or length of service; and such plan or contract does not qualify under section 401(a), 403(a), 403(b), or 408 of the Internal Revenue Code of 1986.
The debtor’s right to receive, or property that is traceable to–
- an award under a crime victim’s reparation law;
- a payment on account of the wrongful death of an individual of whom the debtor was a dependent, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor;
- a payment under a life insurance contract that insured the life of an individual of whom the debtor was a dependent on the date of such individual’s death, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor;
- a payment, not to exceed $23,675, on account of personal bodily injury, not including pain and suffering or compensation for actual pecuniary loss, of the debtor or an individual of whom the debtor dependent, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor; or a payment in compensation of loss of future earnings of the debtor or an individual of whom the debtor is or was
- a Retirement funds to the extent that those funds are in a fund or account that is exempt from taxation under section 401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code of 1986.
Connecticut Exemptions
- Necessary apparel, bedding, foodstuffs, household furniture and appliances;
- Tools, books, instruments, farm animals and livestock feed, which are necessary to the exemptioner in the course of his or her occupation, profession or farming operation;
- Burial plot for the exemptioner and his or her immediate family;
- Public assistance payments and any wages earned by a public assistance recipient under an incentive earnings or similar program;
- Health and disability insurance payments;
- Health aids necessary to enable the exemptioner to work or to sustain health;
- Workers’ compensation, Social Security, veterans and unemployment benefits;
- Court-approved payments for child support;
- Arms and military equipment, uniforms or musical instruments owned by any member of the militia or armed forces of the United States;
- One motor vehicle to the value of three thousand five hundred dollars, provided value shall be determined as the fair market value of the motor vehicle less the amount of all liens and security interests which encumber it;
- Wedding and engagement rings;
- Residential utility deposits for one residence, and one residential security deposit;
- Any assets or interests of an exemptioner in, or payments received by the exemptioner from, a plan or arrangement described in section 52-321a; [Certain Retirement Accounts]
- Alimony and support, other than child support, but only to the extent that wages are exempt from execution under section 52-361a;
- An award under a crime reparations act;
- All benefits allowed by any association of persons in this state towards the support of any of its members incapacitated by sickness or infirmity from attending to his usual business;
- All moneys due the exemptioner from any insurance company on any insurance policy issued on exempt property, to the same extent that the property was exempt;
- Any interest of the exemptioner in any property not to exceed in value one thousand dollars;
- Any interest of the exemptioner not to exceed in value four thousand dollars in any accrued dividend or interest under, or loan value of, any unmatured life insurance contract owned by the exemptioner under which the insured is the exemptioner or an individual of whom the exemptioner is a dependent;
- The homestead [Debtors’ Residence] of the exemptioner to the value of seventy-five thousand dollars, or, in the case of a money judgment arising out of services provided at a hospital, to the value of one hundred twenty-five thousand dollars, provided value shall be determined as the fair market value of the real property less the amount of any statutory or consensual lien which encumbers it; and
- Irrevocable transfers of money to an account held by a debt adjuster licensed pursuant to sections 36a-655 to 36a-665, inclusive, for the benefit of creditors of the exemptioner.
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