Exemptions

[klux]

Why do these vary so much from state to state? I live in Wisconsin, there exemptions seem MARVELOUS compared to some others. Wildcard is over 19,000 if married!

[desperate&broke]

Well, I am crossing the border!!!! ;) WOW. Be grateful!

[Bandit]

That has been asked a couple of times and there does not seem to be any for sure answer. I have also read what some attorneys have had to say about it & there is definately some unfairness and taking advantage of people going on.

I mean you can get 10K for a vehicle in one state and only 700 (hundred) in another state (?)

I have started a long research into this over the winter, making charts, boomarks, notes and comparisons and will it do it unbias from state to state. I asked the same question but only got one reply so it is probably not something people really think about as to why and how come.

I often think some of it is intentional just to see how ignorant the general public can stay about law & things and how far and easy people can be pushed out of house and home. (Kind of like using different states & regions as a testing market & see which works out best...but to who's advantage?)

As we can see for singles doing a BK, it is very easy to lose what you own in one place and in another place you lose nothing at all. Just an observation.

It will be interesting to review the facts & stats across the board and then determine using professional opinions as to how the exemptions got this way.

[Granny]

Some of the exemptions in Texas go back more than a 100 years. The Homestead exemption and lack of garnishments was drafted into the Texas laws when we first became a state and it was to protect a woman and her children.

God Bless Texas

[Bandit]

Thanks Granny! I am definately keeping track of this info on the homestead in Texas. I wish some of the other states would catch on.

[JollyGG]

http://home.law.uiuc.edu/lrev/publications/2000s/2007/2007_1/White.pdf

I found this article interesting about the changes in the bankruptcy law.
The part that interested me in relation to this discussion was a comparison of how many people under the old law would benifit from bankruptcy in different states.

Here's the part that relates to this discussion.
Remember this is a comparison pre bankruptcy reform.


PERCENTAGE OF HOUSEHOLDS THAT WOULD BENEFIT FINANCIALLY
FROM FILING FOR BANKRUPTCY BEFORE BAPCPA57
In the column labeled “Base case,” about 15% of households in the United States would benefit from filing for bankruptcy, compared to 29% of households in Texas alone. The figure for Texas is higher becausehomeowners benefit from Texas’s unlimited homestead exemption and renters benefit from the federal bankruptcy exemptions, which Texas allows. In the next three columns of table 1, the data is recalculated by assuming that households use three different bankruptcy planning strategies to behave opportunistically. In Strategy I, households use their nonexempt assets to pay off part or all of the mortgages on their principle residences. Under this strategy, the percent of households that would benefit from bankruptcy increases by about 2% in the United States overall and by 7% in Texas. In Strategy II, households either move to more expensive homes or improve their current homes. Under this strategy, the proportion of households that would benefit from filing increases by 5% in the United States and 17% in Texas. In Strategy III, households borrow up to the credit limits on their existing credit cards, but do not obtain additional credit cards. (They do not follow Strategies I and II.) Compared to the base case, this strategy causes the proportion of households that benefit from filing to increase by 5% in the United States and 6% in Texas. Finally, in a fourth strategy not shown in table , debtors move to Texas before filing for bankruptcy and invest all of their nonexempt assets in a house. Under this “Texas” strategy, 54% of all households would benefit from filing for bankruptcy.

[lrprn]

States making their own laws regarding their residents is a long and glorious tradition in the US since the earliest times in our history. The problem is that states' rights produces incredibly uneven laws that vary widely from state to state regarding the same area of law. Bankruptcy is just one area of the law where this is seen. It's very hard when you live in a stingy state like Ohio and see what filers in a generous state like Texas get for exemptions.

[Bandit]

http://home.law.uiuc.edu/lrev/public...07_1/White.pdf

Oh how funny. I started laughing and choking on my own air. It is probably so true. If I was going to move that is the place to go. Texas Strategy for all

[Bandit]

States making their own laws regarding their residents is a long and glorious tradition in the US since the earliest times in our history. The problem is that states' rights produces incredibly uneven laws that vary widely from state to state regarding the same area of law. Bankruptcy is just one area of the law where this is seen. It's very hard when you live in a stingy state like Ohio and see what filers in a generous state like Texas get for exemptions.

They are incredibly uneven laws. I bet few people even think about it though or are aware and have never been to BK.

This would be a good reason to have two residency and I am sure the wealthy & law educated people do think about this. It just makes me think though, how it would be if they had to file and use two different states exemptions without actually selling from the one.
People do not really even have time to think about this stuff because you can have both feet planted on the ground today & tomorrow it knocks you down flat.

I thought maybe they look at an average of income for the state. I can't see where some states are even thinking about the people much at all. Kind of like stuck in a time warp.

So, attorneys who live on state lines and in corners of three different states, I bet would see and know a lot more about the differences. (?)

Which brings me to my next question:
What kind of money do states make through BK?

[keepmine]

Which brings me to my next question:
What kind of money do states make through BK?

None. Bk is a federal law.Trustees then apply state exemptions.
No grand conspriacy here. Bk is just not something most people even think about. There are far more people who have never filed bk than those of us who have filed. You're letting your emotions carry away your logic.Since this is an active bk site, it stands to reason most of us are here over bk issues. Go to some popular personal finance sites and you seldom even see bk as a topic.
BTW, you really need to read the bk code. A careful look will reveal that for the most part, forum shopping is unrealistic. The code specifically calls for a 730 day {2 year }residency requirement before you can use your new states exemptions. Also, if you bought a home fewer than 1415 days prior to filing, your equity is capped at $125K.
In the event that you are in a gray area where you can't use either of 2 states exemptions, you are allowed to use federal exemptions.

[Bandit]

Hey keepmine, That all makes sense. Good post.

Do you think one reason some states keep some exemptions real low is to prevent any fraud or lower the opportunity for fraud and abuse?
Like you said, if very few people have to actually do BK compared to total population.

I would like to examine that eventually from the personal injury column.

[keepmine]

I think in many states, bk is just is an afterthought for legislators.
Fl. for example has a large retiree population . The largest asset most people have is there home thus, the unlimited homestead exemption.
NY and Ariz, are the only 2 states that I'm aware of that raised the homestead exemption post bk reform.

[Bandit]

I think in many states, bk is just is an afterthought for legislators.
Fl. for example has a large retiree population . The largest asset most people have is there home thus, the unlimited homestead exemption.
NY and Ariz, are the only 2 states that I'm aware of that raised the homestead exemption post bk reform.

I understand what you are saying.

On that same thought about the afterthought for legislators and raising the homestead in two states...
Do you think the same idea applies to the airlines and big companies like that? I ask because I noticed when some of them need to go BK, instead of the government letting them fall like that, they give them money to keep them afloat.
In something like that, is it better to give them a few bucks to keep business going than to let them BK? because the BK would hurt everyone worse?