Non Exempt Law and Legal Definition
In a Chapter 7 bankruptcy, the trustee categorizes the debtor's property as "exempt" or "non-exempt", according to the type of property and the dollar limits which apply to various types of exempt property. Once this categorization process is complete, following the creditors' meeting, the trustee will collect the debtor's non-exempt property. The non-exempt property is then sold or liquidated, with the proceeds used to pay off the debtor's unsecured creditors.
Non-exempt property laws vary by state. In some cases, the debtor will have the opportunity to keep non-exempt property by entering into a "buy-back" agreement with the trustee. After signing a buy-back agreement with the trustee, the debtor will make either a lump sum payment to the trustee or make monthly installment payments over a period of several months.
Examples of non-exempt property may include:
- Collections of stamps, coins, and other valuable items.
- Family heirlooms.
- Cash, bank accounts, stocks, bonds, and other investments.
- A second car or truck.
- A second or vacation home.
Examples of exempt property may include:
- Motor vehicles, up to a certain value.
- Reasonably necessary clothing.
- Reasonably necessary household goods and furnishings.
- Household appliances.
- Jewelry, up to a certain value.
- A portion of the equity in the debtor's home.
- Tools of the debtor's trade or profession, up to a certain value.
- A portion of earned but unpaid wages.
- Public benefits, including public assistance (welfare), social security, and unemployment compensation, accumulated in a bank account.
Legal Definition list
Related Legal Terms
- Ab Abusu Ad Usum Non Valet Consequentia
- Ab Assuestis Non Fit Injuria
- Absoluta Sententia Expositore Non Indiget
- Accessorium Non Ducit Sed Sequitur Suum Principale
- Actus Me Invite Factus Non Est Meus Actus
- Actus Non Facit Reum Nisi Mens Sit Rea
- Ad Quaestiones Facti Non Respondent Judices; Ad Quaestione Legis Non Respondent Juratores
- Administration De Bonis Non
- Administration De Bonis Non Cum Testamento Annexo
- Administrative Exemption