If you file for Chapter 7 bankruptcy, there are numerous exemptions that you can use to protect the property that you own. This is important because people are usually concerned about having to give up all of their assets, and they may worry that they won’t be able to have a successful future without them.
These exemptions come in many different forms, such as one that allows you to keep the tools of one’s trade or another that allows you to protect your home through a homestead exemption. Still a third option is known as a wildcard exemption. What is this and how does it work?
It can be used for almost anything
The basic idea behind the wildcard exemption is that not all of your assets are going to fit into neat categories, so you need something that you can apply to anything you want. Connecticut does offer this, but it’s important to note that the exemption is just $1000. Other states offer far more, but Connecticut caps this at a relatively low level.
There’s also a federal exemption
One thing to keep in mind is that there’s a federal wildcard exemption, as well, and it is actually set at $1,475. This could give you a little more flexibility if you choose the federal exemptions. Doing so is possible in some cases.
It’s also wise to note that omitting the homestead exemption, under the federal rules, can give you as much as $13,950 for a wildcard exemption. So, if you don’t need the homestead exemption, you may be able to protect far more of your other assets than you would under the $1,000 limit.
Filing for bankruptcy may be a bit more complicated than you assumed, and that’s why it may be important to understand all of your legal options.