Protecting your property during a Connecticut bankruptcy

One of the biggest bankruptcy myths people often believe is that they will lose everything they own if they file for bankruptcy protection - an idea that couldn't be more wrong.


The truth is that bankruptcy typically permits you to keep a great deal of your property, while simultaneously allowing you to get out from under crushing debt. In fact, many people who file for bankruptcy protection will be able to keep most, if not all, of what they own.

For instance, bankruptcy law expressly permits you to exempt certain types of property from the bankruptcy estate should you file a Chapter 7 bankruptcy - meaning you can keep this property following the bankruptcy process. However, in order to understand exactly how this process works for those living in Connecticut, you must first examine both state and federal bankruptcy law.

Understanding bankruptcy exemptions in Connecticut

Under federal bankruptcy law, individual states have three options when it comes to bankruptcy exemptions: use the exemptions established under federal law, create their own state-specific exemptions or allow debtors to use either federal or state exemptions. The last option is the one followed in Connecticut.

Essentially, this means when you file bankruptcy in Connecticut, you can choose between the exemptions listed under federal law or state law. Be careful, however, because once you choose one set of exemptions you must stick with it for all exemptions.

Some of the more common assets protected under Connecticut bankruptcy exemptions include:

  • Your home, up to $75,000 in value or equity, per person, which is more commonly known as the homestead exemption
  • Your vehicle, up to $3,500 in value
  • Your personal property, including necessary clothing, bedding, furniture and appliances
  • Your wedding and engagement rings

Married couples filing bankruptcy jointly can often stack, or double, their exemptions if they both own the property. For example, if you and your spouse jointly own your home, you can typically claim a homestead exemption of $150,000 if you file for bankruptcy together.

What about federal exemptions?

Importantly, the exemptions listed above are only the ones permitted under Connecticut state law and do not reflect their federal counterparts. In fact, depending on the circumstances, federal exemptions may be more generous. Some common federal exemptions include:

  • A homestead exemption of $22,975 per person
  • A motor vehicle exemption of $3,675
  • An exemption for household goods/furnishings of $12,250
  • A "wildcard" exemption of $1,225 that can be used on any property, plus up to $11,500 of any unused portion of your homestead exemption

Ultimately, you need to speak with an experienced attorney in order to determine which set of exemptions - state or federal - are best suited to meet your specific goals and financial needs.