Bankruptcy exemptions can be confusing for residents of Kansas who are considering filing a bankruptcy. The purpose of an exemption is to protect some of your property from being collected by the bankruptcy trustee and sold to satisfy your indebtedness. This prevents you from losing everything when you file a bankruptcy.
The Bankruptcy Code provides two options for exemptions. There are federal exemptions and the state may offer its own exemptions. Some states allow a debtor a choice between the two, but Kansas does not; you have to use the Kansas state exemptions.
The exemptions cover clothes, some personal property, a bible, some jewelry and limited equity in a vehicle. The exemptions can vary by state and the legislature may change the items covered and values at any time.
Most Chapter 7 bankruptcy cases are no-asset filings, meaning that after the exemptions are considered, there are no assets for the trustee to sell. But occasionally, a trustee will determine that a particular item of property should be sold.
Typically, it will involve an asset like a luxury car that exceeds the state’s exemption or some other item, typically like a valuable gun or piece of jewelry.
In a recent case from Illinois, the property was a first edition of the Book of Mormon that the woman had and the trustee attempted to sell, as some similar copies had sold for tens of thousands of dollars.
The bankruptcy court ruled the trustee could sell the book, but the district court reversed that ruling, noting that she had refrained from selling the book for ten years, in spite of needing money, due to the “non-monetary value.”
For most people who file bankruptcy, this is rarely an issue. Your attorney can review your assets and explain how the exemptions will apply to your situation.
Wall Street Journal, “Ruling Lets Bankrupt Woman Keep Rare Mormon Scripture,” Katy Stech, November 26, 2014