What Is the Wild Card Exemption When Filing Chapter 7 Bankruptcy?
Under federal law there is a set of bankruptcy exemptions. The exemptions contain something known as a wild card exemption. This wild card exemption can be used for non-exempt property or for partially exempted property.
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Wild Card Use with Exempt Property
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Some types of property may be exempt, but only up to a certain dollar amount. In that case, it may be possible for the wild card exemption to make up the difference and allow that property to be kept.
Wild Card Use with Non-exempt Property
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If the wild card exemption is used for non-exempt property, that property is treated as if it were exempt up to the dollar amount of the wild card used.
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Dollar Amount of the Exemption
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The amount of the wild card exemption is continually updated to reflect inflation. As of 2009 the amount of the wild card exemption was equal to $1,075 plus up to $10,125 of unused money from the homestead exemption.
Benefits
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The wild card is useful because it allows a person to keep any nonexempt property that is very important to him. Even cash can be protected.
Limitations
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Not all states allow the use of federal bankruptcy exemptions. Some states have their own set of bankruptcy exemptions.
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