What benefits do the federal exemptions offer for married couples?
Exemptions Available to Debtors
Debtors often are most concerned about property retention. While some debtors will have few assets, others have accumulated assets to go with a lifestyle they no longer can afford. Ability to advise clients accurately about what assets they may retain and what assets are subject to handing to the bankruptcy court is essential.
Competency questions:
What benefits do the federal exemptions offer for married couples?
Are assets related to employment subject to any special rules?
How does the filing date affect the retention of income tax refunds?
Using the current federal bankruptcy exemptions under 11 U.S.C. §522(d), evaluate the following fact pattern and determine what property the debtor should be able to retain. Submit your assignment in memo form. Cite all sources using Bluebook format.
For information about how to write a law office memo, click here:
Fact Pattern for the Assignment
Charles and Betty Jones are married. Charles and Betty jointly own their home subject to a mortgage. They owe $200,000 on their mortgage, and the home’s appraised value is $170,000. Charles also owns two vehicles in his sole name. Betty uses the Ford Escort to drive to work, etc., while Charles uses the Dodge Ram truck. The Ford Escort is owned free and clear and is valued at $5,000. The Dodge Ram is worth $20,000 and is subject to a lien of $16,000.
Charles works construction and has many tools of his own. He obtained an appraisal showing his used tools are worth $3,500. Charles has no retirement savings, but Betty has an IRA with $10,000 and a 401k with $70,000. On the day they file for Chapter 7 bankruptcy, Charles and Betty have $300 in their joint checking account and $900 in their joint Christmas savings account.
Charles and Betty have a purebred Golden Retriever they bought last year for $800. Their household contents (furniture, kitchen items, etc.) are estimated to be worth $5,000. They own three flat screen TVs, each worth $200. They also have a sound system worth $1,500.
When they were engaged 20 years ago, Charles gave Betsy a diamond engagement ring. Betsy had it appraised now, and the ring is worth $4,000. They both have gold wedding bands worth $300 each.
The bankruptcy was filed on February 1st of this year. The Joneses have not yet filed income tax returns for the previous tax year, but the prior year they received $2,000 from their federal income tax refund and $300 from their state refund, and they expect to receive similar amounts this year.
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