Every 3 years many of the dollar amounts in the bankruptcy statutes are adjusted for inflation. Here’s a summary of the important changes.
Various bankruptcy laws include important threshold dollar amounts. These laws about dollar amounts can affect everything from what assets you can keep to the kinds of debts you can discharge (legally write off).
Every three years about 50 of these dollar amounts are adjusted to reflect the change over this time in the consumer price index. The new dollar amounts were just published today in the Federal Register. They reflect a 3.016 percent increase from 3 years ago (rounded to the nearest $25), reflecting the relatively low inflation rate during this period.
Today’s blog post, and the next one, give a summary of the new dollar amounts which are most relevant to consumer bankruptcy cases.
Then the following several blog posts will go through these in detail. Together these will be a good introduction to some of the most important issues in bankruptcy.
Federal Property Exemptions
Under the federal Bankruptcy Code each state has a choice: 1) it can require its bankruptcy-filing residents to use that state’s set of property exemptions, or 2) the state can let its residents choose between the state’s exemptions and a federal set of exemptions.
19 states (Alaska, Arkansas, Connecticut, Hawaii, Kentucky, Massachusetts, Michigan, Minnesota, New Hampshire, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Texas, Vermont, Washington, and Wisconsin.) plus the District of Columbia allow its residence to use either their state exemptions or the federal ones.
For those people, the federal property exemption amounts (Section 522(d)) are being increased as follows:
- homestead, from $22,975 to $23,675
- motor vehicle, from $3,675 to$3,775
- household goods and clothing, from $575 to $600 “in any particular item,” from $12,250 to $12,625 “in aggregate value”
- jewelry, from $1,550 to $1,600
- “any property,” from $1,225 to $1,250, plus from $11,500 to $11,850 to the extent of any unused homestead exemption
- tools of trade, from $2,300 to $2,375
- personal bodily injury claim, from $22,975 to $23,675
Presumption of Fraud for Discharge of Debts
The threshold amount for purchases of “luxury goods and services” made within the 90 days before filing bankruptcy for them to be presumed to be fraud (and therefore not dischargeable) increased from $650 to $675. And the threshold amount for cash advances made within 70 days before filing bankruptcy for them to be presumed to be fraud increased from $925 to $950. (Section 523(a)(2)(C).)
Our next blog post in a couple days will give the rest of the list of these changes coming on April 1, 2016.