When exactly is an item considered exempt?

[Aledrell]

So my understanding which is probably wrong, is it seems that if you claim something as exempt it's exempt from the day you put it on paper that way. Although if at any time you get challenged and lose the status changes? Is this right? Anyone have any statutory law or case law on this?

[tcreegan]

exemptions

Hi Aledrell,

Most states and the federal govt have lists of personal property that is exempt, meaning exempt from other people trying to sell it off to pay your debt.

In BK Ch7, it means the trustee can't take it and sell it to give $$ to your creditors.

For each list of exemptions, there is usually a dollar figure for the maximum you can claim for that property.

Example: You have a motor vehicle exemption for $2,400 This means you can exempt up to $2,400 in motor vehicle value from the BK

If you have one car worth 1,800 and one car worth 300, then you exempt both and still have some room left over.

If you have one car worth 1,100 and one car worth 12,000, you can exempt the 1,100 car and 1,300 of the 12,000 car. Since the 12,000 car is worth a lot more than the exemption, the trustee will sell the car, give you 1,300 (your exemption amount on this vehicle) and keep the rest to pay off your creditors.

Some states say you can choose between the state exemptions and the federal exemptions. Some states say you have to use the state exemptions only (like Colo) Some states say you can pick and choose between them (like Texas) Calif has two sets of state exemptions and you have to chose system 1 or system 2.

Now to finally answer your question; Yes it is exempt when you declare it exempt. The only challenge can be over the value. You claim the car is worth $300 but the KellyBlueBook value is $4,500 Someone can challenge this.

What most people forget is that the value of their property is what it could be sold for now. On cars, that is not the trade-in value. It is the value you could get selling the car to the dealer or on the street, in it's given condition.
This really makes a difference in household goods and clothes. These are used items, what do they sell for at a garage sale or thrift store?

Hope that helps clear things up,

Well up to mud level anyhow...

Tom in Colo

[despritfreya]

In response to:

"Now to finally answer your question; Yes it is exempt when you declare it exempt. The only challenge can be over the value."

Not true in the context of a Bankruptcy. Under Fed.R.Bankr.P. 4003(b) a party in interest has 30 days after the First Meeting of Creditors to file an objection to the exemption. A Trustee may file an objection at any time prior to 1 year after closing of the case if the debtor fraudulently asserted the claim of exemption.