In a chapter 7 case, you can keep all property which the law says is “exempt” from the claims of creditors. Here are some examples of exemptions available in Maine. This is not a full list:
- $47,500 in equity in your home ($95,000.00 if your interest is held jointly or if you have minor or elderly dependants at home; $95,000.00 if you are over 60 years of age or seriously disabled)
- $5,000 in equity in your car
- $200 per item in any household goods. There is no limit on the total amount
- $5,000 in things you need for your job (tools, books, etc.)
- $400 in any property, plus part of the unused exemption in your home
- Your right to receive certain benefits such as social security, unemployment compensation, veteran’s benefits, and public assistance – regardless of the amount
- Most retirement accounts up to $1,000,000.00 in value (such as IRA’s, 401(k) plans and 403(b) plans)
The amounts of the exemptions are usually doubled when a married couple files together.
In determining whether property is exempt, you must keep a few things in mind. The value of property is not the amount you paid for it, but what it is worth now. Especially for furniture and cars, this may be a lot less than what you paid or what it would cost to buy a replacement.
You also only need to look at your equity in property. This means that you count your exemptions against the full value minus any money that you owe on mortgages or liens. For example, if you own a $50,000 house with a $40,000 mortgage, you count your exemptions against the $10,000 which is your equity if you sell it.
While your exemptions allow you to keep property even in a chapter 7 case, your exemptions do not make any difference to the right of a mortgage holder or car loan creditor to take the property to cover the debt if you are behind. In a chapter 13 case, you can keep all of your property if your plan meets the requirements of the bankruptcy law. In most cases you will have to pay the mortgages or liens as you would if you didn’t file bankruptcy.
If you have not lived in Maine for the past 2 years, then your exemptions might be very different. Please let us know if you have lived outside of Maine during part of the past two years.