The effect of the new law now?

[LostInTexas]

While most things in the new bankruptcy law don't go into affect until 180 days from the time it was signed by the Prez, the home equity limit ($125K) started immediately. While this had a a negative impact in Texas and Florida, it is a big improvement in many states. Would this not be a big help for someone filing now, in a state that had a very low home equity limit?

[HHM]

Actually no, it doesn't work that way.

If your state allows you to elect to use the Federal Exemption, then you can use the higher federal cap, if your state has opted out of the federal exemptions and has a lower exemption than $125, you are limited to your states exemption.

Some recent good news about this issue:
There was actually a recent judicial decision out of AZ about this issue. Its a little technical to get into here, but whether the equity cap effects you or not depends on whether your state allows you to ELECT federal or state exemptions. If your state has completely opted out of federal exemptions (many have), then you can only rely on your state's exemption. The good news is, the AZ court ruled that the Equity Cap ONLY applies to those states that allow their citizens to "elect" federal or state exemptions, if your state has opted out of the federal exemptions, then according to the AZ court, the equity cap does not even apply.