What personal property is exempt?
Most states and the federal exemption scheme protect essential personal property. The goal is to let debtors keep the basics they need to live and work. The federal exemptions under 11 U.S.C. § 522(d) include:
| Category | Federal Amount | Section |
|---|---|---|
| Household furnishings, goods, clothing, appliances, books, animals, crops, musical instruments | $700 per item, $14,875 aggregate | § 522(d)(3) |
| Jewelry | $1,875 | § 522(d)(4) |
| Tools of the trade (implements, books, etc.) | $2,800 | § 522(d)(6) |
| Health aids | Unlimited | § 522(d)(9) |
Tools of the trade
If you are self-employed or work in a trade that requires specific tools, the tools of the trade exemption is important. Under the federal scheme, you can protect up to $2,800 in tools, professional books, and other implements used in your trade or business.
State exemptions vary widely. Some states are much more generous -- Texas, for example, allows substantial tools of the trade exemptions for individuals and families. Other states have no specific tools exemption at all.
The key requirement is that the property must actually be used in your trade or business. A computer used for work qualifies. A computer used only for gaming does not.
What about valuable personal items?
High-value items like art, collectibles, electronics, or expensive equipment may exceed the personal property exemption. If they do, you have several options:
- Apply the wildcard exemption to cover the excess value
- Negotiate with the trustee to pay the non-exempt amount
- Accept abandonment -- the trustee may decide the cost of sale exceeds the likely recovery
In practice, used personal property has low resale value. The trustee considers liquidation value (what they could actually sell it for), not replacement value. A $2,000 TV might have a liquidation value of $200.
Trustees almost never take used household goods. The cost of storing, transporting, and selling used furniture, clothing, and appliances almost always exceeds the proceeds. These items are effectively always exempt in practice, even if they technically exceed the dollar limit.