When you file for personal bankruptcy, you certainly do not want to lose your home. You see this hard step as an opportunity to get rid of the mounting debts that owe to various creditors. You certainly do not see insolvency as the end of your financial life. Your intention by taking this unfortunate step is to give a fresh start to your non-existent fiscal life. No matter what the reason is that forced you towards filing bankruptcy, and how different the laws are in different states, every state provides certain homestead exemptions to the debtors. In order to make the best use of these exemptions, you must be aware of the different state laws regarding the same.
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What Is Homestead Exemption
A homestead exemption is a provision in the law that protects the equity of your homestead properties up to a certain limit. Different states have defined this exemption in separate ways. The maximum limit of exemption varies from state to state. However, if the equity of your residential properties is less than the limit specified under the homestead exemptions for personal bankruptcy, you can easily protect your home from the terrifying claws of your creditors. Your house, in that case, will not be sold in order to pay the creditors' bills.
Different State Laws
You should know that the limit specified for such exemptions vary from one state to another. Every state follows the same code of laws, but when it comes to defining exemptions and determining limits for the same, every state has the authority to define the same in different ways. Some states like Florida are very liberal for the debtors while some others have defined the exemptions in favor of the creditors.
New Changes
However, before the introduction of the new bankruptcy laws on October 2005, there had been no specified limit for such exemptions. It is only after the inclusion of these new laws that upper limits were placed on the amount of equity that could be protected. No matter how generous a particular state is in defining the homestead exemptions, there is an upper limit that you can exempt under personal bankruptcy. The amount of exemption is determined by the state. That would be the state where you have been living for the past two years before filing your petition.
Overall, we can see that it could be quite a complicated task to make the best use of the exemptions in your favor. That is the reason you are advised to hire an attorney to help you with this. But, whether you are hiring a bankruptcy attorney to handle your case or not, you are recommended to attain the basic understanding of certain exemptions, including the homestead ones.
Your home is an important asset for you and you certainly do not want to lose the same. That is the reason why you are advised strongly to understand all about property exemptions before you file for personal bankruptcy.
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