Saturday, May 9, 2009
BANKRUPTCY EXEMPTIONS
The laws regarding bankruptcy are hard to understand. It comprises of both state laws and federal laws making things confusing. So choosing the correct bankruptcy exemptions and to derive benefit from them can be a challenging task. Though, federal administration has the ultimate authority, still the states are empowered to decide the bankruptcy exemptions. The state exemptions vary from state to state.Certain states develop bankruptcy exemptions according to their choice that has nothing to do with federal exemptions. And in some states, it is found that choices are given to decide which exemption to choose. In California, a person is given the chance to choose among state and federal exemption. However, no state offers to choose both federal as well as state exemption.
According to the new law, if a person is willing to file for bankruptcy then he or she must pass the residency requirements. But it is found that more and more people who intends to file bankruptcy is choosing state exemptions to make a better deal. Therefore, the government made certain changes to residency requirements. As per new bankruptcy law, if a person is willing to avail state exemptions then that person must be the resident of that state for at least two years. If not then the person can avail the state exemption of that state where he or she was living previously. Few states do not allow this. In that case, the only choice is federal exemptions.
A person must choose the exemptions based on their property requirements. If a person want to keep their home then it is obviously good to choose homestead exemptions. So choosing the type of exemption must also be done carefully.
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