For many people considering bankruptcy here in Appleton, one of the biggest misconceptions or fears may be that a debtor will have to give up everything to pay off what debt is possible. However, this is not true – bankruptcy exemptions play a huge role in protecting those seeking bankruptcy as a solution, and can help reduce the impact of filing.

In fact, one recent example highlights an exemption in action during a personal bankruptcy. A candidate for a city clerk position in Detroit recently answered questions about her ongoing bankruptcy as part of her campaign for the elected office. In doing so, she publicly backed bankruptcy as a way to protect her assets while dealing with debt.

Noting the well-known story behind Donald Trump’s success – he had previously filed bankruptcy on a few occasions – the candidate was firm in stating that her bankruptcy would not impact her ability to successfully take on the role. In fact, she knew it was the best answer to her financial troubles, and offered that bankruptcy courts were in place to help protect important assets. In particular, the candidate has been able to keep her home of 20 years, which is protected as one of the bankruptcy exemptions.

For those here in Wisconsin looking to bankruptcy as an answer just as this city clerk candidate did, it may be important to understand what may be protected through bankruptcy exemptions. The law allows the filer to keep a basic standard of living through the process, which can mean keeping a car and house. Of course, there are both federal exemptions and state exemptions that can come into play, and depending on the circumstances of a particular filer’s case, it may be better to seek protection from one or the other.

Bankruptcy exemptions play an important role in the process, protecting things that may be most important to a filer. With a calculated approach, the use of exemptions can help limit the impact of filing for bankruptcy and allow the debtor to gain the relief needed to start fresh.

Source: Detriot Free Press, “City clerk candidate says personal bankruptcy won’t affect ability to do the job,” Joe Guillen, Sept. 17, 2013