Wildcard Exemption

[nohope]

What is the wildcard exemption?

[tobee43]

a quick search

"In states that haven’t opted out of the federal exemptions, such as Massachusetts, there exists something referred to as the “wild card” exemption. This is a very useful exemption and what allows most bankruptcy debtors to keep all their property. Section 522(d) of the Bankruptcy Code states, in relevant part:

The following property may be exempted [...]
(1) The debtor’s aggregate interest, not to exceed $20,200 in value, in real property or personal property that the debtor or a dependent of the debtor uses as a residence, in a cooperative that owns property that the debtor or a dependent of the debtor uses as a residence, or in a burial plot for the debtor or a dependent of the debtor.
[....]
(5) The debtor’s aggregate interest in any property, not to exceed in value $1,075 plus up to $10,125 of any unused amount of the exemption provided under paragraph (1) of this subsection.

Subsection five is the wild card exemption. These two subsections work together to allow the debtor who doesn’t use the so-called federal homestead to exempt over $10,000 in “any property”. This, coupled with the other asset-specific exemptions found elsewhere in Section 522, usually allows a debtor exempt all his property in bankruptcy. Note: the dollar amounts in the statute adjust up every three years and will do so again in 2010."

now in florida we were allowed the exemption as long as we could prove 2 years of residency and did not own a home...i know it may work differently in different states.

[ValleYum]

What is the wildcard exemption?

Some states allow a "wild-card" exemption - it is called this because just like a "wild-card" in poker, you can use this exemption to cover the value/equity in any property you want to keep in a bankruptcy.

An example of how this would be helpful: You have a $5k "wild-card" exemption. You own your car outright. The Kelly Blue Book says your car is worth $10k but the vehicle exemption in your state is only $8k. You could use $2k of the $5k "wild-card" exemption to cover the difference in value/equity that the Trustee might want you to pay for otherwise. Other things you can exempt are tax returns, jewelry, family heirlooms, etc.

New Jersey doesn't have a "wild-card" exemption but they allow you to use the Federal Bankruptcy Exemptions that have a *very* generous "wild-card" (especially if you don't have equity in a home to protect).

Federal "wild-card" exemption amounts are:

* $1,150 of any property - 11 U.S.C. § 522 (d)(5)
* Up to $10,825 of unused homestead exemption amount, for any property - 11 U.S.C. § 522 (d)(5)

(Dollar amounts effective 04/04/2010)

The above amounts can be doubled for a married couple that files bankruptcy together.

[daylate]

I think tobee gave you the info you need. One thing to add is that if you are filing jointly you can double the amounts shown in certain districts. Another is even if you have a house, but are surrendering it you can use the unused portion of the homestead exemption. Again this could be district specific. Good luck.

[nohope]

I am single. Where does the homestead exemption come in? Lawyers told me there was a $20K homestead exemption in NJ. Thanks

[ValleYum]

I am single. Where does the homestead exemption come in? Lawyers told me there was a $20K homestead exemption in NJ. Thanks

IIRC, New Jersey is the only state in the United State of America that does not offer any homestead exemption to debtors so I believe your lawyers would be referring to the federal exemption for your homestead of $21,625. If you don't have that much equity in your home to exempt, then you can use the unused portion - up to $10,825 - of that federal homestead exemption as your "wild-card". Since you are single, you would simply not double the amount of the federal exemptions.

[nohope]

So the maximum exemption in NJ is $21,625 total? (I have much more equity than that but as I've posted before, I'm now concerned that my house will be sold for far less than it should be...). When I questioned them on the value that they put on my car (it's 8 years old with over 158K miles on it, is in need of several repairs) - they told me the excess would be exempt - so that's part of the $21,625????

[ValleYum]

If you are single, $21625 is the amount of the federal homestead exemption.

There is an $1150 federal "wild-card" that isn't part of the homestead exemption that you could use towards part of your excess value on your vehicle.

This is a very good article about NJ vs. Federal exemptions and it is written in plain English. Read it and it should answer most of your questions about exemptions. http://www.legalconsumer.com/bankrup...-law.php?ST=NJ

[nohope]

too bad they valued by car by over $2000 of the allowed $3450...

[ValleYum]

too bad they valued by car by over $2000 of the allowed $3450...

Ugh, really? Who is "they"? Kelley Blue Book or your attorney? Maybe you could go to CarMax or some place like that to get them to give you a value for your car. Hopefully it could be a little less than the one you currently have.

[nohope]

my attorney. I told him it needed tires, brakes, some body work, tune up, 156K miles. I found out later he appraised it as good condition. when I told them to change it they told me the $2000 was included in my exemptions. When I said I wanted the value of the car lower, they told me to go hire a mechanic.

[daylate]

As a NJ native myself, I suggest you tell your attorney to go NJ himself and do what you, his paying client wants-LOL. Seriously this guy sounds like a jerk. I'd go and get an estimate from CarMax (if they will even give you one) or some other place and then insist he value it they way you want. Remember its your estimation, not his.

[tobee43]

As a NJ native myself, I suggest you tell your attorney to go NJ himself and do what you, his paying client wants-LOL. Seriously this guy sounds like a jerk. I'd go and get an estimate from CarMax (if they will even give you one) or some other place and then insist he value it they way you want. Remember its your estimation, not his.

LOL!! that's why we left nj...it was such a creditor friendly state..and of course, if we did file there it would have had to go federal.

and the worse scenario is the trustee has one buy back the additional value of the car...we applied our wild-card exemption to cover the ONLY asset we had left at the time, which was our car.

[keepsmiling]

Unfortunately there is no carmax in NJ. I think you have to shlep to CT. Might be worth it to make a day trip out of it....

[daylate]

Of course in NJ, it being like Highway 61, a $100 to Joe the Used Car Guy might be cheaper than gas & tolls to Connecticut. Ok no more Jersey jokes-I kinda miss it. Especially the shore and the food.