When you are filing for a bankruptcy, you need to consider how to protect your most important properties. For example, it doesn't make sense to be free from debt if you don't have a home to live in. Just because you are trying to break free from your debt does not mean that you have to give up all of your assets. To protect your home, you need to claim a homestead exemption, but you need to know what you are doing.
State or Federal Exemptions
There are two systems for exemptions when you are filing for bankruptcy. You have the federal system and the system of the state that you are living in. In some states, the federal system is not available because the state requires its residents to use their system. On the other hand, there are some states that you give you the option of using either the state or the federal system. If you have this choice, it should be based on which system gives you the best ability to protect your assets.
Rules for Claiming Exemptions
Choosing between state or federal exemptions is not always as easy as simply selecting whichever system you like best. Rules exist to govern which system you use. If you have been living in a state that gives you the option of using federal exemptions, you will have to live in the state for 730 days before you can claim federal exemptions. This is known as the 730-day rule. The next rule you need to know is the 180-day rule. This rule stipulates that you have to live in a state for at least 180 days before you can file for bankruptcy according to the state's rules. Before you have lived in a state for at least 180 days, you will have to to file according to the rules from the state you previously lived in. Knowing these rules will help you to make smart choices about filing for bankruptcy so that you can protect your assets.
If you are the breadwinner for your home, you have to make sure that you protect those that depend on you. Filing for a homestead exemption will help you to keep a roof over your family's head. Whether or not you qualify will depend on which system you use, so before you file for bankruptcy, make sure you know that you are able to protect what matters most. For more information, contact FactorLaw.