One of the greatest concerns for those facing bankruptcy is what will become of their home and property that they have worked hard to obtain and maintain. There are no guarantees in a bankruptcy except those covered by federal and state statutes providing exemptions types and amounts of real and personal property.
In the D.C., residents may choose to claim either state or federal exemptions; however, they cannot combine them. It is important, therefore, to understand those exemptions to determine which are best for each debtor.
How to Keep Your Car
State and federal exemptions differ in this area:
- Federal exemption – $3,225
- District of Columbia exemption – $2,575
However, a vehicle that is used to secure a loan is subject to repossession if those loan payments are not maintained.
How to Keep Your Home
- Federal homestead exemption - $20,200
- District of Columbia exemption – unlimited for any property or co-op that the debtor or their dependants use as their residence
If the debtor has any mortgages or loans that are secured by that property, they must continue to make regular payments or face the possibility that that property can be foreclosed upon by the lien holder.
The District of Columbia allows exemptions for other forms of personal property:
- Household furnishings, goods, clothing, appliances, pets, books, or musical instruments – up to $425 per item and $8,625 total
- Health aids
- Family pictures
- Family library – up to $400
- Provisions – up to 3 months
- Wrongful death payments
- Payments the debtor depended upon, including compensation for pain and suffering
- Co-op association holdings – up to $50
- Condominium deposit
- Cemetery or burial plot
- College tuition savings accounts
- Tools of the trade
- Notary public seals and documents
- Implements, professional books, or tools – up to $1,625
- Library, office furniture, and implements of a professional or artist – up to $300
- Mechanic’s tools – up to $200
- Any other property up to $850, and up to $8,075 of unused portion of homestead exemption
Filing Schedule C of a Bankruptcy Petition
Exemption claims will only be granted on those items listed on Schedule C and attached to the bankruptcy petition. That form must include:
- A list including each property claim exemption
- The federal or District of Columbia 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)
Talk to a DC Bankruptcy Lawyer First
Once someone has made the decision to file for Chapter 7 bankruptcy, it is crucial to determine whether to use the federal or District of Columbia exemptions. While local exemptions may seem more advantageous, there are elements to consider that many filers will not be aware of unless they are legal experts. A local bankruptcy attorney deals with these issues every day, and they can provide the legal and financial advice debtors need as they go through this stressful process.
