The bankruptcy law allows debtors to take certain property out of the property of the estate by claiming the property as exempt under state or federal law. BRA s522. The bankruptcy statute itself contains a list of exempt property, BRA s522(d), however, Congress permitted states to deny debtors the right to claim these exemptions. BRA s522(b)(1). Consequently, in most states the debtor may take out of the bankruptcy estate only that property that is exempt under the law of the state in which the debtor has filed together with property that is exempt under federal law other than the bankruptcy law. BRA s522(b)(2). It should be noted that property that is subject to a valid lien is not exempt to the extent of the lien. BRA s522(c). However, debtors may avoid judicial liens and certain nonpossessory, nonpurchase-money security interests to the extent that the liens or security interests impair an exemption. BRA s522(f). Exemptions are claimed in Form 6, Schedule C. A debtor who fails timely to claim exemptions risks losing them. BR 4003(a) Moreover, the trustee and creditors may file objections to exemptions that they dispute. BR 4003(b).
