When people are sued and a creditor obtains a judgement lien against them, the creditor is
able to try to collect the money owed by going after the debtor's property. Protection from creditors varies state
to state, but most states allow a certain value of property allowances called "exemptions" whereby debtors would
be able to keep some of their property. If property is exempt, it is protected from creditors. If it is not exempt,
then it is possible for creditors to reach the property.
The drafters of the Bankruptcy Code did not want people to be completely destitute and without
means to reorganize their affairs after emerging out of bankruptcy, so they also allow people to exempt, or protect, some
property. Even though bankruptcy law is federal, it isn't the same from place to place and exemptions are one of the
things that changes depending on where you live when you file your bankruptcy case.
In many cases, the bankruptcy exemption allowances are sufficient to enable a debtor to keep all of what
he or she has. The trustee’s job is to determine what non-exempt property exists, and if any does then
it is the trustee’s job to sell it, or collect the value, so the trustee can pay towards the debts. If you exceed
the "allowance", you may have to give something up or you might be able to "buy it back" and keep it, either by getting the
money from a third party or by filing Chapter 13.
Exemptions can be complicated, and there are many exemptions that are not readily found. There
isn't just one simple list that you can look at. If sued, judgments are collected using a variety of federal and state laws.
In bankruptcy, the law that is applied will depend on which state you live in and how long you have lived there. One reason
to hire a lawyer is to be sure that you are using all the protections that the law gives you to protect your property from
creditors and that you are using all of the correct exemptions that apply to your property. An experienced bankruptcy lawyer
can help you maximize your exemptions, tell you which exemptions apply, and advise you on how to best protect your property.