Des Moines, IA (Law Firm Newswire) February 22, 2011 – Depending on the state in which one lives, there may be access to state or federal exemptions when bankruptcy is declared. Some states opt for federal exemptions, while states like Iowa opt out and provide state exemptions.
“Filing for bankruptcy means that you have certain exemptions. In a nutshell what that means for you is you are allowed to keep a certain amount of your assets, meaning they are untouched. This means you have the ability to start over again and not be caught up in the vicious circle of debt entrapment,” said Kevin Ahrenholz, an Iowa bankruptcy lawyer.
If a personal residence is exempted up to a certain dollar figure, it will mean that if the home is exempt up to $45,000, the person filing bankruptcy may have to sell to clear the debt for anything above the value of $45,000. While some of the rules and regulations may seem confusing and intimidating, hiring a competent Iowa bankruptcy lawyer will make the filing go smoothly and without the anxiety most people facing bankruptcy experience. As with anything relating to the law, things change, and exemptions are subject to adjustment every few years to match the current consumer price index.
Depending on the state, there may also be a homestead exemption. “Here is how that works,” Ahrenholz said. “If the state homestead exemption is $25,000 and you have equity in your home valued at $110,000, one would need to file Chapter 13 bankruptcy or sell your home. After the sale, you keep roughly $25,000, with the rest going towards paying your debt. Those living in Iowa are very fortunate because there is an unlimited homestead exemption with a few exceptions to that general rule.”
“Additionally, there are federal non-bankruptcy exemptions and they may be filed under your own state’s exemptions,” Ahrenholz said. Those non-bankruptcy options cover pensions for military service employees, railroad workers, civil service workers and foreign-service staff. “You will also find other exemptions in this area that cover things like public benefits such as disability benefits for government workers and death benefits. There are other areas, but it’s best to ask about those when you speak to your Iowa bankruptcy lawyer,” he said.
There are exemptions that only apply in certain cases, meaning filing bankruptcy is a case-by-case scenario and its best not to assume that exemptions one may have read about are applicable straight across the board for everyone. When in doubt, discuss bankruptcy dos and don’ts with a skilled Iowa bankruptcy lawyer.
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