For many people struggling with debt problems, the thought of pursuing bankruptcy protection can often be intimidating. Many people assume that filing for bankruptcy will result in the loss of their most important possessions, including their home and any vehicles they may own. In reality, however, many of those who file for bankruptcy are able to keep these and other essential items, through the use of a variety of different exemptions written into the bankruptcy code.

Bankrupty or Divorce?
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Bankruptcy exemptions vary considerably from state to state, but many states allow individuals to use exemptions available under the federal bankruptcy code. However, for a quick explanation of some of the most common bankruptcy exemptions that debtors use to preserve their most important belongings, we’ve compiled the following list:

* Wildcard exemption: while this exemption isn’t available in every state, for those who file for bankruptcy in states with a wildcard exemption, it can be one of the most beneficial exemptions available. It allows debtors to exempt property which would not otherwise be exempt, up to a certain value.

* Homestead exemption: this exemption allows homeowners to exempt a certain amount of the equity they hold in their home (the difference between their home’s market value and what they owe on its mortgage) from bankruptcy proceedings. Depending on the amount of equity held by the homeowner, they may be able to keep their home from any liquidation proceedings.

* Vehicle exemption: like the homestead exemption, this exemption allows debtors who own a vehicle to exempt a certain amount of equity in their vehicles from bankruptcy proceedings. In most cases, this will allow those who file for bankruptcy to keep their vehicles.

* Jewelry exemption: many debtors may own jewelry which has been passed down through the generations in their family. By using the jewelry exemption in bankruptcy proceedings, it may be possible to preserve some or all of these pieces.

These are just some of the wide variety of different exemptions available for use in bankruptcy under the various bankruptcy codes in different states throughout the country. To get a more concrete understanding of which exemptions may work for your particular situation, speak with a bankruptcy lawyer in your state.

Carlos is an experienced legal and financial blogger interested in raising awareness of the ways bankruptcy can help those who are buried deep under their financial burdens.

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