Exempt and Non exempt Assets

What does Exempt and Non exempt Assets mean?

In the bankruptcy process, all assets of the bankruptcy estate are determined by state and federal bankruptcy laws to be either exempt or non-exempt for liquidation. Any asset, including equity determined by law to be exempt, is left in the control of the debtor during the bankruptcy process.

Any non-exempt asset can be liquidated by the bankruptcy court to pay debts owed by the bankruptcy estate. By making certain assets exempt from bankruptcy liquidation, a filing debtor has a better opportunity to make a fresh financial start after bankruptcy.

Each state has their own allowable bankruptcy exemptions as described by state bankruptcy laws, but in most cases, a filing debtor has the opportunity to choose whether to use the federal or state exemptions. Depending on the state where the filing debtor files, they either have to use state exemptions, they can choose between state or federal exemptions, or they can use the federal exemptions. The debtor cannot choose both federal and state exemptions. If a choice is allowed, it is one or the other but not both.

The notion of exempt and non-exempt can be confusing. The terms are also used in determining which debts will be or will not be discharged in bankruptcy. Certain debts can be discharged by bankruptcy, and there are certain debts that can never be discharged by bankruptcy (see exempt and non-exempt debts).

Related Pages


Previous Entry

Exclusivity


Browse Legal Glossary Alphabetically:

1 | A | B | C | D | E | F | G | H | I | J | L | M | N | O | P | Q | R | S | T | U | V | W | Z |




Bankruptcy Attorneys near Ashburn VA

R and B Law Group, PLLC

R and B Law Group, PLLC Profile Picture
7700 Leesburg Pike, Suite 312
Falls Church, VA 22043

Andrews Law Firm

Andrews Law Firm Profile Picture
122 North Alfred Street
Alexandria, VA 22314

Scott R. Sexauer, Attorney at Law

Scott R. Sexauer, Attorney at Law Profile Picture
10521 Judicial Drive, Suite 200
Fairfax, VA 22030

Term of the Day

Criminal Case

A criminal case is filed against a defendant by the state or government for committing public wrongs or crimes.

Category: Criminal Law