18:48
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LSDefine
Simple English definitions for legal terms
exempt property
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A quick definition of exempt property:
Exempt property refers to property that creditors cannot take away and sell to pay off debts during bankruptcy. Each state has different rules about what property is exempt, but it often includes things like clothes, furniture, retirement savings, and a small amount of equity in a home or car.
A more thorough explanation:
Exempt property refers to any property that creditors cannot take and sell to pay off debts during bankruptcy. Each state has its own list of exempt property, but it typically includes:
- Clothing
- Home furnishings
- Retirement plans
- Small amounts of equity in a house and car
For example, if someone files for bankruptcy and they own a car worth $5,000 but they only have $2,000 left to pay on it, the car may be exempt because the equity in the car is less than the amount of the exemption. This means that the creditor cannot take the car and sell it to pay off the debt.