If you are married and filing jointly for bankruptcy, there is an opportunity to double the allowed bankruptcy exemptions to protect more of your assets. Whether you meet the qualifications for filing a Chapter 7 bankruptcy or are filing for Chapter 13; protecting your major assets such as your home, car and other major items is essential. There is much built into the structure of bankruptcy filings that can help you. Each type of bankruptcy has allowable exemption limits that are rated in dollar amounts that you can apply to the assessed value of your assets to exclude them from a debt liquidation sale or as accountable resources.
There are two different standards for filing bankruptcy, federal and state. While some federal regulations must be followed by the states, the state regulations may supersede the federal guidelines. It is up to the state whether to honor the federal regulations in full or in part. The bankruptcy exemption limits will vary between state and federal rules. If you are filing for bankruptcy jointly, both state and federal regulations allow you to double your exemptions on the declared asset protections.
For example, if the allowed exemption is $14,000 in homestead assets, both partners may take the full exemption creating a combined homestead exemption amount of $28,000. This is a simplified example of the doubled exemption allowed in bankruptcy and there are specific rules that will apply that may lower the rate from an exact doubling. Depending on certain requirements, the actual homestead exemption which applies to the structure may and may not be doubled.
Depending on where you are filing for bankruptcy, the state rules may allow for a greater double exemption than the federal, but offer less advantages in other areas of the bankruptcy claim. While many states will allow you to select from the federal or state guidelines when applying for bankruptcy, they will not let you ‘mix and match’ from each. In other words, you may not take the double exemption as defined by the federal guidelines and the best interest test regulations from your state. You must choose which guidelines are to be applied for the entire application. More of this can be discussed by a dallas bankruptcy attorney.
The double exemption option is only offered to those who are eligible to file jointly for bankruptcy and who do so. The eligibility requirements are evolving state by state, so check to see what the current requirements are in yours. Do not assume that if you choose to follow the federal guidelines for bankruptcy that any federal eligibility for joint filing will be allowed by the state. If the state deems you ineligible for filing jointly, it may be enough to prevent you from using the federal guidelines.