Exempt Property

Category: legal

Assets that a debtor is legally permitted to keep and protect from being sold off during a bankruptcy liquidation.

Exemptions are the "survival kit." Public policy doesn’t want debtors left completely destitute on the street. State and federal laws provide exemptions for necessities like a primary home (homestead exemption), a basic vehicle, retirement accounts, and tools of the debtor's trade.

Common Examples

• The contractor was able to keep his pickup truck and heavy equipment because they qualified as exempt property under the tools-of-the-trade rule.
• Because Florida has an unlimited homestead exemption, the debtor was able to protect their multi-million dollar primary residence from creditors.