One of the primary questions that people have when they realize they need to file for bankruptcy is what is going to happen to their assets. The answer to this isn’t the same for everyone who files for bankruptcy protection in Connecticut. This is because people who file here can choose between state exemptions or federal exemptions.
You can’t pick and choose between these two sets of exemptions. These are the specific exemptions that you will receive if you choose the state bankruptcy exemptions:
Homestead exemption
The homestead exemption covers the equity you have available in your home. The state exemption covers $75,000 of equity for a single filer or $150,000 of equity for a married couple filing for bankruptcy together. This exemption can only be used on the home that you currently reside in.
Motor vehicle and personal property exemptions
Connecticut allows for the exemption of up to $3,500 in motor vehicle equity. Unlike many other states, Connecticut doesn’t limit personal property in bankruptcy, but it does provide a specific list of what can be kept. Some of these include clothing, furniture, wedding and engagement rings, appliances, and several other assets.
Other notable exemptions
Part of your wages is exempt in a bankruptcy. This is either 75% of your total income or 40 times the current minimum wage. The state exemption covers the higher of those. There’s also an exemption for tools of the trade for items you need for work, as well as a $1,000 wildcard exemption that can be used for any property. Certain insurance, public, and retirement benefits are also exempt.
It’s important to note that nonexempt property isn’t automatically forfeited. Instead, it is up to the trustee to determine if the available nonexempt assets are worth enough to liquidate to pay off debts. Working with someone familiar with bankruptcy filings may be beneficial since they can walk you through the process and help you learn what to expect.