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Federal Wildcard Exemptions

exemptions federal

Most state bankruptcy exemptions are specific to a type of property at a specific value or amount and can only be used to protect that property at that amount. Some examples of such exemptions are:

Equity in your personal residence
Car or motorcycle
Household goods (such as appliances, bedding, clothing, garden tools, furnishings)
Tools that are needed for your business or profession

Most states set out their own exemptions to be used by bankruptcy filers which may be either different or similar to the federal exemptions; however, if for example your state exemption for motor vehicles is four thousand dollars ($4000) and your motor vehicle is valued at two thousand five hundred dollars ($2500), you will not be able to redirect or use the outstanding one thousand five hundred dollars ($1500) to add it to another asset exemption amount. In simple terms; you cannot use your left over asset exemption amount on any other asset you wish to exempt.

The federal wildcard exemption on the other hand, can be used to exempt any property of your choice; you will not be limited to any specific type of property at all. Some states allow you to use an unused portion from an exempt asset to any other property, while other states do not allow for such provision. In respect of the state of Texas, it allows bankruptcy filers to use either the federal exemptions or to use the state exemptions exclusively. Once a bankruptcy filer has chosen the federal exemptions he/she has access to the federal wildcard exemption.

The federal wildcard exemption is currently one thousand two hundred and fifty dollars ($1250) plus up to eleven thousand eight hundred and fifty dollars ($11850) of any unused portion of the federal homestead exemption. If you are married and have filed jointly for bankruptcy, this doubles the federal wildcard exemption amount. For a single bankruptcy filer without any homestead equity, the federal wildcard exemption is thirteen thousand one hundred dollars ($13100).

How the Federal Wildcard Exemption Works

The federal wildcard exemption is used to protect the equity in various assets you own like any other exemption, however, the up side of the federal wildcard exemption is that it is not limited to a particular type of property so it can be applied to any assets or combined with other exemptions. For example; if you had a second home which you did not want to lose in the bankruptcy proceedings, the law in place in respect of the Texas bankruptcy exemption does not cater for two homes but for one homestead. If there is say four thousand dollars ($4000) for the allotted primary home exemption and you needed five thousand dollars ($5000) equity for the second home; if you choose the federal bankruptcy exemption you would be able to save your second home through the provision of the wildcard exemption.

If you require more information regarding federal bankruptcy and bankruptcy exemptions in Texas why not seek out a law firm of renowned professionals to assist you.


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Michael Busby is a Houston divorce lawyer who has been in practice for over 20 years and appears daily in the Family Law Courts of Harris County and Fort Bend County Texas

Busby & Associates , have two Houston Offices, one in Chinatown, Houston Texas and another in Independent Heights, Houston, Texas. Michael Busby is Board Certified in Family law by the Texas Board of Legal Specialization.