Bankruptcy Exemptions in Connecticut

Debt can be debilitating; but it does not have to destroy anyone.  In fact, bankruptcy can be a wise solution for those who cannot solve their debt problems any other way.  However, you must understand the options and take advantage of every protection the law allows.  One of the most powerful protections is found in the property exemptions provided by both federal and state statutes.  Exemptions can help save some, or in some cases, all of the goods and property a consumer has worked so hard for.  In Connecticut, the law allows debtors to choose to claim federal property exemptions or those the state offers.  However, no one can apply some of both; its one complete set or the other.  However, before choosing, it’s important to know what they offer.

How to Keep Your Car

State and federal exemptions differ in this area:

• Federal exemption – $3,225
• Connecticut state exemption – $3,500

In addition, it is important to keep up any loan payments that are secured by that vehicle.  If not, a creditor may be able to repossess the vehicle to reclaim their loan.

How to Keep Your Home

• Federal homestead exemption - $20,200
• Connecticut state exemption – $75,000 for real property, including a mobile or manufactured home
  • Only applicable to claims submitted after 1993
  • Exemption up to $125,000 for debt arising from services provided at a hospital

Any loans or mortgages secured by that property must be paid according to contract or the lien holder can still foreclose.

Connecticut allows exemptions for other forms of personal property:

• Clothing, food, furniture, appliances, and bedding – any amount
• Burial plot
• Necessary health aids
• Wedding and engagement rings
• Security and utility deposits
• Recoveries for damaged exempt property
• Transfers to nonprofit debt adjusters
• Tools of the trade
  • Tools, instruments, books, and farm animals – all needed for trade
  • For military personnel – arms, military equipment, uniforms, and musical instruments – all
• Wildcard – any additional property – up to $1,000

Filing Schedule C of a Bankruptcy Petition

Each item claimed must be listed on Schedule C and attached to the bankruptcy petition.  Schedule C must include the following information:

• A listing of the each property exemption being claimed
• The state statutes that apply to each exemption
• The exemption value of each property claim
• The current assessed value of each property claim (not the market value)

Getting Legal Help

Bankruptcy is a traumatic step to take and it should not be entered into lightly.  Moreover, in fact, those who do not understand the process or the implications should consult a bankruptcy lawyer first.  A bankruptcy attorney can provide the legal and financial advice you need to determine whether you should file for bankruptcy, which method to use, and which exemptions offer the greatest benefit.  Without the help of such a legal expert, there are many missteps and errors and that can delay or derail a bankruptcy petition.