Generally, a Chapter 7 Bankruptcy debtor has to give up his/her personal belongings and other assets in order to pay off some of the debts. However, law allows debtors to keep certain assets. These are referred to as Chapter 7 bankruptcy exemptions. Each state has a different range of exemptions and a dollar value limit to most of those exemptions. The wild card exemption is a type of exemption which allows a debtor to keep assets or property that are not generally exempt under other Chapter 7 bankruptcy exemptions.
There is a general wild card exemption that allows a debtor to use a fixed amount and exempt a set amount of property as long as the value does not exceed the limits set in the debtor’s state. An example for this is given below. A debtor may have a $2000 wild card exemption. This would let a debtor to keep $2000 of any assets that s/he would otherwise have to give up. A debtor might use this exemption for things such as a family heirloom or any other personal property that the debtor owns which s/he does not want to give up.
Another form of wild card enables a debtor to use unused portion of homestead exemption to preserve some assets of his/her choice. A homestead exemption usually permits a debtor to keep some of his/her home equity. If a debtor does not have home equity to keep, the entitled amount may then become a wild card exemption and s/he might be able to keep other property of his/her choice up to that value.
A wild card exemption applies only in Chapter 7 bankruptcy. The dollar amount of exemptions is usually adjusted every three years. The rules of wild card exemptions vary from year to year, from state to state. So, if a debtor intends to claim this exemption s/he should check the rules regarding wild card exemption in his/her jurisdiction to find which apply in his/her state and situation.