Definition - What does Exempt Asset mean?
In a chapter 7 bankruptcy, a classification of assets is required in order to liquidate those which are deemed disposable. Non-exempt property or a non-exempt asset is considered disposable. Exempt assets are considered mandatory for life and are allowed to be retained. Examples of exempt property include a house, a car, clothing, a small allowance for jewelry, and any tools which are required in order to work or any machines that are required for the home to stay liveable such as air conditioning and heating units. Appliances which hold substantial value but which are installed in the home are generally exempt as well such as a dishwasher or central vacuuming system. Every bankruptcy jurisdiction follows a set of guidelines that are very close to the federal guidelines in determining what each category can use as a total limit. For example, a homestead exemption in Alabama may be different than the homestead exemption in Texas. The same can also be said of vehicles and other exemptions. It is important that you talk with your bankruptcy attorney or the Trustee about your potential exemptions.
Justipedia explains Exempt Asset
Wedding rings are not always considered exempt; if they are plain bands then they may be exempt, but if the rings hold a substantial value above that of an average wedding ring then the Trustee can order that they must be sold. The Trustee would generally allow for less expensive ones to be purchased in replacement. Only the main home would be considered exempt in a bankruptcy. Vacation homes are eligible for liquidation. Second cars are considered non-exempt in most states, but are allowed in a few bankruptcy jurisdictions.
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