Bankruptcy law is designed to relieve debtors from the oppressive weight of debt – but they shouldn’t have to lose everything they have in the process just to file Chapter 7. That’s why exemptions allow every debtor to protect certain assets. (Non-exempt property belongs to the bankruptcy estate, so the trustee can choose to liquidate those assets to satisfy some of your debts.)
Understanding more about these exemptions can help you see what applies to your situation.
What’s exempt under state law?
It’s important to note that a bankruptcy exemption does not shield an asset against a secured creditor. For example, if you have a car note and you’re drastically behind, your bankruptcy may temporarily delay repossession but it won’t halt it forever unless you’re able to catch up and reaffirm.
That being said, here are the most critical bankruptcy exemptions available under state law:
- A homestead exemption that allows you to protect $27,900 in real or personal property that is used as a residence for you or your dependent or in a burial plot for you or your dependent
- A motor vehicle exemption that permits you to claim $4,450 in equity (which can be claimed by each debtor when spouses file jointly)
- Up to $14,875 of household goods, including furniture, personal items, appliances, musical instruments or animals, so long as no single item is worth more than $700
- Up to $1,875 of jewelry items (which is typically used to protect a debtor’s wedding rings or similar important items)
- A “wildcard” exemption worth $1,475 plus up to $13,950 worth of any unused homestead exemption.
Debtors in Oregon who file bankruptcy do have the option of using the exemptions provided under federal law instead of state law if they so choose. Whether or not this is preferable depends largely on the specifics of your case and your goals. Experienced legal guidance can help you compare the options and pick the path that is best for you.
