When filing for bankruptcy in South Dakota, a key concern for debtors is determining which assets are protected and which might be liquidated to repay creditors. The concept of “exempt property” is crucial in this regard, as it enables individuals to retain certain essential possessions, aiding their fresh start post-bankruptcy. Please continue reading as we explore what property is considered exempt during bankruptcy and the importance of connecting with our experienced Rapid City Bankruptcy Lawyers today for guidance.
What Are Common Exemptions in Bankruptcy?
Bankruptcy law permits individuals to safeguard certain assets from being used to repay creditors during the bankruptcy process. The purpose of exemptions is to enable a debtor to keep essential items to promote financial stability after bankruptcy. South Dakota offers two key exemptions:
- The Homestead Exemption: This is the most significant exemption, which allows homeowners to protect a portion of equity in their primary residence. The exemption limit is $170,000 for individuals 70 years or older and $60,000 for those under 70. Acreage restrictions apply, with the exemption limited to one acre within a municipality or 160 acres outside of one.
- The Wildcard Exemption: Debtors may select other personal property for protection, up to a specified value. A head of household can exempt $7,000 in personal property, while individuals who are not heads of household can exempt $5,000.
Other exempt property includes:
- Motor vehicles
- Household goods
- Clothing
- Retirement accounts
- Tools of the trade
- Personal injury recoveries
- Life insurance
- Public benefits
- Health aids
- Alimony and child support
It’s important to understand that exemptions have value limits, which means you can only protect assets up to a certain dollar amount. Additionally, the specific exemptions that are available might differ depending on whether you choose to file for Chapter 7 or Chapter 13 bankruptcy.
Does South Dakota Allow the Use of Federal Bankruptcy Exemptions?
In South Dakota, residents filing for bankruptcy have to use the state’s specific exemption laws to protect their assets. This is because the state has opted out of the federal bankruptcy exemptions. Consequently, individuals don’t have the option to compare federal and state exemptions to determine which would be more beneficial for their particular circumstances.
Understanding what property is exempt during bankruptcy is imperative, offering debtors a safety net as they work towards a fresh financial beginning. Navigating the complexities of bankruptcy exemptions can be difficult. A bankruptcy attorney can help strategize how to protect as much of the debtor’s property as legally possible. Consult with a qualified bankruptcy attorney from 605 Bankruptcy to understand the specific exemptions available to you in your state and how they apply to your unique situation.
