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Bankruptcy Law Blog

Friday, April 17, 2020

Wild Cards Do More Than Help Get Your Team In The Playoffs, They Are An Important Bankruptcy Tool

In sports, a team awarded a wild card slot gets to go to the playoffs even though they failed to qualify in the normal way. This prevents teams in really strong conferences from being excluded while weaker teams in less competitive conferences get an easy berth in the playoffs. It’s all about making the system fairer.

In the bankruptcy world, the term “wild card” is used to describe a type of exemption that can be used by a debtor to save (aka exempt) a particular piece of personal property from being sold off or returned to creditors. Once again, fairness is the justification. It would not be fair to expect a family to start over from scratch post-bankruptcy.

However, wild card exemptions are just one type of exemption a Chapter 7 bankruptcy filer can use to protect their property. In Alabama, a debtor who is knowledgeable about the Chapter 7 bankruptcy process, or chooses to work with an experienced bankruptcy attorney, can prevent a lot of their stuff from being taken by the courts to pay off creditors.

Alabama Bankruptcy Exemptions

The Homestead Exemption

Each person in the state of Alabama who files for bankruptcy under Chapter 7 is allowed to exempt up to $15,500 in real property from being taken by the courts to pay debtors. This amount can be used to shield a home, a mobile home, or up to 160 acres of land. Spouses who are filing bankruptcy together can double this exemption and shield $31,000 in real property.

It is helpful to consider an example. Say a couple has a home worth $100,000. If the mortgage is more than $31,000, but less than $100,000, the couple can exempt whatever equity they have in the home and use that to make a fresh start.

Personal Property

While the homestead exemption protects real property (land), other exemptions protect personal property (items other than land that you can touch or hold in your bare hands).

Alabama, like most other states, allows families to keep clothing, books, and family portraits and pictures. It also allows filers to hold on to pre-purchased burial places and church pews.

Tools of Trade

There is also an extra personal property exemption called the tools of trade exemption. It allows state military personnel to keep arms, uniforms, and equipment they are required to have as a condition of their service.

Monetary Assets

When someone files for bankruptcy, they typically must turn over any cash they have on hand. Alabama state law does allow people to hold on to certain retirement accounts, pension funds, and insurance benefits.

Motor Vehicle

Unlike many other states, Alabama does not have an exemption that allows people to shield a vehicle from repossession. This is where the wild card exemption becomes especially useful.

Wild Card

Each Chapter 7 filer is allowed to exempt $7,750 worth of any personal property. Married couples can double this amount and exempt $15,500. This is enough to allow many couples to hold on to at least one vehicle.

The real benefit of the wild card exemption, however, is that it can be used for anything the filer wants, not just vehicles. We have seen filers use it to save their guns, their boat, and valuable family heirlooms.

Mobile & Baldwin County AL Bankruptcy Attorneys

If you are getting ready to file for bankruptcy, and you want to ensure that your family is in the best position possible when you get your clean slate and begin to rebuild, the attorneys at Padgett and Robertson are ready to help. Please contact us today to schedule an initial consultation.


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Padgett and Robertson assist clients with Bankruptcy, Personal Bankruptcy, Consumer Bankruptcy, Chapter 7 Bankruptcy, Chapter 13 Bankruptcy and The New Bankruptcy Law in Mobile, Alabama and throughout southern Alabama. Alabama State Bar Association Regulations require the following: "No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers." 11 U.S.C. 528 of the U.S. Bankruptcy Code requires the following: "We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.”



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Alabama State Bar Association Regulations require the following: "No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers." 11 U.S.C. 528 of the U.S. Bankruptcy Code requires the following: "We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.”