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What is a wildcard exemption in bankruptcy?

On Behalf of | Feb 2, 2025 | Chapter 7 Bankruptcy

If you file for bankruptcy in Connecticut, there are many different exemptions to consider. With Chapter 7 bankruptcy, the goal is to liquidate your assets and use the money to pay off a portion of your debt. However, you can use exemptions to prevent the liquidation of certain assets, meaning you may not lose as much as you expect.

For instance, Connecticut has a homestead exemption and one for your primary motor vehicle. There is also a personal property exemption that can be used for items like wedding rings or family heirlooms, along with an exemption for tools of the trade. That means if you own equipment necessary for your profession, you can exempt these items so that bankruptcy does not take away your means of earning a living.

The wildcard exemption can be used for anything

With the wildcard exemption, you have the flexibility to exempt anything you choose. This exemption is relatively small, amounting to just $1,000 under Connecticut law, but the flexibility is still beneficial. If you have $1,000 worth of property that would otherwise be liquidated, you can protect it by using this exemption.

It is important to note that this does not reduce your other exemptions. For example, you can still exempt up to $3,500 in equity in your car or 75% of your weekly wages. You are also allowed to exempt up to $75,000 in equity in your home. If you are married and filing jointly for bankruptcy with your spouse, the homestead exemption doubles, allowing you to exempt $150,000. The $1,000 wildcard exemption is applied in addition to these other exemptions, rather than taking away from them.

As you can see, there are many financial factors to consider when filing for bankruptcy. Be sure to understand the legal steps you need to take and the options available to you.