Lesson 33: Wildcard Exemption

As part of our series on Exemptions in Bankruptcy, this lesson delves into the Wildcard Exemption, an important provision that can significantly impact your bankruptcy case.

What is the Wildcard Exemption?

The Wildcard Exemption allows you to protect a certain amount of equity in any property of your choosing. Unlike specific exemptions that apply to particular types of property (e.g., homestead, automobile), the Wildcard Exemption is flexible and can be applied to any asset.

How Does the Wildcard Exemption Work?

The amount you can exempt using the Wildcard Exemption varies by jurisdiction. In federal bankruptcy cases, the Wildcard Exemption is defined under 11 U.S. Code ยง 522. States may have their own Wildcard Exemption amounts and rules.



In a federal bankruptcy case, if the Wildcard Exemption amount is $1,325, you can apply this to any property you want to protect.

Example Scenario

Consider the following example to understand how the Wildcard Exemption can be applied:


  
Example

  
John is filing for Chapter 7 bankruptcy and has the following assets:

  
    
    
  • $500 in a savings account
    • 
    
  • $1,000 worth of furniture
    • 
    
  • An old car worth $1,800
    • 
  


  
Using the Wildcard Exemption, John can protect any of these assets up to the allowed amount.

Visual Representation

graph TD A["Wildcard Exemption"] B["Savings Account: $500"] C["Furniture: $1,000"] D["Old Car: $1,800"] A --> B A --> C A --> D

Calculations Using MathJax

Let's calculate how John can distribute the Wildcard Exemption:

Assume the Wildcard Exemption amount is \( \$1,325 \).

John can protect:

  • Savings Account: \( \$500 \)
  • Furniture: \( \$825 \) (remaining Wildcard Exemption: \( \$1,325 - \$500 \))

D3 Visualization

Conclusion

Understanding the Wildcard Exemption can be crucial in maximizing the protection of your assets during bankruptcy. For more detailed information, you might want to refer to our detailed guide on Exemptions.

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