Exempt Assets (Bankruptcy) Law and Legal Definition

Exempt assets include those properties that a debtor is allowed to keep with him/her irrespective of the bankruptcy proceeding. Such property is free from claims of a creditor, who do not have a lien on the property. Exempt assets must be listed in statement of financial affairs and schedules. Exempt assets are defined in both federal and state law.

Under federal statute a homestead up to a value of $32.300is exempted from bankruptcy proceeding filed by a couple jointly. Thus, if a home is worth $70,000 and has a $25,000 mortgage, creditors can claim only $12,700 (the difference between the equity of $45,000 and the $32,300 exemption).