Exemptions are designed to give you some relief during a bankruptcy. With the help of an exemption, you can keep some of your assets out of your bankruptcy estate and protect them from creditors. If you are planning to file for bankruptcy, here is what you need to know about exemptions. 

What Can an Exemption Protect?

What an exemption can be used to protect depends on your state's laws. Each state has categories for exemptions and you can only protect assets that fall within those categories. For instance, most states have a homestead exemption. It allows you to keep your home if its value is at or beneath a certain dollar amount. The amount varies by state. 

Some states do have a wildcard exemption. You have the freedom to choose the assets you want to protect using the special exemption. The amount of the exemption is set by state law. 

How Can You Get the Most from Your Exemptions?

Before you file for bankruptcy, you need to find out what exemptions are allowed by your state. If your assets are not going to be protected by the exemptions, you and your attorney can explore other means for dealing with your financial situation. 

In addition to learning what the state exemptions are, you need to know the rules. Since each state sets the rules regarding its exemptions, there are some unique rules that might work to your advantage and allow you to retain ownership of more of your assets. 

You also need to consider whether filing for a state or federal bankruptcy would be best. Depending on the state in which you live, the federal exemption might be worth more. If that is the case, you could fare better by filing through the federal courts. 

In addition to these measures, you need to explore the idea of doubling your assets. If your spouse is planning to also file for bankruptcy, you can combine your exemptions to protect your assets. For instance, if your state allows $25,000 for the homestead exemption, but your home's value is $45,000, you and your spouse can combine your individual exemptions and save your home. 

Whether or not exemption doubling is allowed depends largely on your state's laws. If so, you need to file for bankruptcy at the same time to avoid any delays in processing your bankruptcy filings. 

There are other tactics you can use to save your assets in a bankruptcy. Consult with an attorney, like O'Connor Mikita & Davidson LLC, as early as possible to learn which methods would work best for you.