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Simple English definitions for legal terms
wildcard exemption
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A quick definition of wildcard exemption:
Wildcard exemption: A special rule that helps protect some of a person's things (like a special toy or family heirloom) from being taken away by people they owe money to. This rule can be used along with other rules that protect specific things like a house or car. The amount of protection varies depending on where a person lives, but it's usually between $400 and $30,000.
A more thorough explanation:
Definition: Wildcard exemption is a legal provision that protects some of the debtor’s personal assets from creditors during bankruptcy. It is one of the few exemptions allowed by the Federal government and state governments.
The wildcard exemption can be applied to any of a person’s assets, such as a sentimental heirloom, and is often used in combination with other exemptions.
For example, if a person owns a car worth more than the motor vehicle exemption, they can use the wildcard exemption to protect the additional value of the car.
In Federal bankruptcy, the wildcard exemption is $1,250 plus any unused homestead exemptions up to $11,850. However, the amount of the wildcard exemption can vary from state to state. For instance, in Maine, it is $400, while in California, it can be over $30,000.
Example: John is filing for bankruptcy and has a collection of rare coins worth $2,000. He can use the wildcard exemption to protect the entire value of his coin collection, as it is not covered by any other exemption.
Explanation: This example illustrates how the wildcard exemption can be used to protect assets that are not covered by any other exemption. In this case, John's rare coin collection is not covered by any specific exemption, so he can use the wildcard exemption to protect its entire value.