Exempt vs. Non-exempt Property

EXEMPT PROPERTY.   Bankruptcy is federal law, but each state has its own list of “exempt property.”  Every state, including Kansas, defines certain property as exempt from attachment. That is, when the sheriff is out trying to glom on to something to sell to pay a judgment for an unsecured debt, he can’t take exempt property. In Kansas, exempt property includes:

The homestead, the home you live in and own (with or without mortgage).

Household goods – all your ordinary furniture, appliances, clothing, and a year’s worth of supplies; pretty much everything in your house that you need to live an ordinary life.

One car each for debtor and spouse, up to $20,000 equity in each car.

Life insurance and retirement accounts, usually, but there are exceptions, so be sure to review this category carefully with your lawyer!

Tools of the trade up to $7500.

Jewelry up to $1000.

Public assistance, including social security, workers compensation, unemployment, and the like.

There are other exemptions, and some property may be exempt or not, depending on its use.

[important]BEWARE!  You should review your exemptions carefully with your attorney.  A given item may be exempt property in some cases but non-exempt in others!  Improperly classifying property may cost you thousands of dollars.  If you have any property that even might be non-exempt, you’ll want to be sure you discuss this matter carefully with your attorney.[/important]

NON-EXEMPT PROPERTY is everything else – cash (whether in your pocket, in the bank, on its way to you in the form of a refund check, or otherwise), luxury sporting equipment, accounts receivable (money owed to you), stocks and bonds (unless held in qualified retirement accounts), the airplane in your back yard, the condo in the Swiss Alps – everything else.

[warning]To use Kansas exemptions, you must be a Kansas resident.  If you reside in another state, or if you recently moved to Kansas, you must be sure to check the residency requirements and use only the exemptions applicable to your (current or former) state.[/warning]