What are Tools of the Trade in a Bankruptcy Case?
When you are planning to file for personal bankruptcy, it is important to understand how various bankruptcy exemptions in Illinois will apply to or impact your bankruptcy case. As you might already know, in a Chapter 7 bankruptcy case, all non-exempt assets will be liquidated so that creditors can be repaid and so that the debtor can receive a bankruptcy discharge. The debtor will be able to keep all exempt assets in a liquidation bankruptcy. In a Chapter 13 bankruptcy, exemptions are not used to determine which assets a debtor can keep since property is not liquidated. Rather, in a Chapter 13 bankruptcy case, exempt property does not count toward the total amount that the debtor must repay through a repayment plan.
When you are researching bankruptcy exemptions, you might have come across an exemption described as a “tools of the trade” exemption. What is this exemption, and how does it work?
Understanding the “Tools of the Trade” Bankruptcy Exemption
Both the federal bankruptcy exemptions and Illinois’s bankruptcy exemptions have a “tools of the trade” exemption, although debtors in Illinois are required to use the Illinois bankruptcy exemptions (in other words, a bankruptcy filer in Illinois cannot choose between federal and state exemptions).
What is the “tools of the trade” exemption under Illinois law? According to Illinois law, a debtor who is filing for bankruptcy can exempt personal property that includes “the debtor’s equity interest, not to exceed $1,500 in value, in any implements, professional books, or tools of the trade of the debtor.”
Assets That May Count as “Tools of the Trade”
Which assets are exempt under that definition? Specific implements or professional books may obviously qualify, such as implements a mechanic uses to perform work on motor vehicles or implements an electrician or plumber uses to perform work in houses and businesses. The types of assets that are classified as professional books also might be more obvious, such as manuals that a person may need in order to perform their jobs, such as pharmacists who rely on books containing critical information about drugs, or auto mechanics that rely on manuals to perform maintenance or repairs on specific vehicle models. Examples of the last and broader category of “tools of the trade” can be a bit more complex and, for some debtors, confusing.
What kinds of assets might be classified as “tools of the trade”? You may be able to exempt any assets that you require in order to do your job. While physical implements and professional books have already been covered, other tools of the trade might include, for example, the computer you use in order to perform data entry work or in order to complete graphic design work. If you are a filmmaker or a photographer, a camera might be classified as a tool of the trade and may be exempt. In some cases, even uniforms that are required for work can be classified as tools of the trade.
Contact an Oak Park Bankruptcy Attorney
Do you have questions about bankruptcy exemptions? Our Oak Park bankruptcy attorneys can assist you. Contact the Emerson Law Firm today for more information.
See Related Blog Posts:
How Does Consumer Debt Collection Work?
How Does Bankruptcy Impact Foreclosures and Evictions?
When you are researching bankruptcy exemptions, you might have come across an exemption described as a “tools of the trade” exemption. What is this exemption, and how does it work?
Understanding the “Tools of the Trade” Bankruptcy Exemption
Both the federal bankruptcy exemptions and Illinois’s bankruptcy exemptions have a “tools of the trade” exemption, although debtors in Illinois are required to use the Illinois bankruptcy exemptions (in other words, a bankruptcy filer in Illinois cannot choose between federal and state exemptions).
What is the “tools of the trade” exemption under Illinois law? According to Illinois law, a debtor who is filing for bankruptcy can exempt personal property that includes “the debtor’s equity interest, not to exceed $1,500 in value, in any implements, professional books, or tools of the trade of the debtor.”
Assets That May Count as “Tools of the Trade”
Which assets are exempt under that definition? Specific implements or professional books may obviously qualify, such as implements a mechanic uses to perform work on motor vehicles or implements an electrician or plumber uses to perform work in houses and businesses. The types of assets that are classified as professional books also might be more obvious, such as manuals that a person may need in order to perform their jobs, such as pharmacists who rely on books containing critical information about drugs, or auto mechanics that rely on manuals to perform maintenance or repairs on specific vehicle models. Examples of the last and broader category of “tools of the trade” can be a bit more complex and, for some debtors, confusing.
What kinds of assets might be classified as “tools of the trade”? You may be able to exempt any assets that you require in order to do your job. While physical implements and professional books have already been covered, other tools of the trade might include, for example, the computer you use in order to perform data entry work or in order to complete graphic design work. If you are a filmmaker or a photographer, a camera might be classified as a tool of the trade and may be exempt. In some cases, even uniforms that are required for work can be classified as tools of the trade.
Contact an Oak Park Bankruptcy Attorney
Do you have questions about bankruptcy exemptions? Our Oak Park bankruptcy attorneys can assist you. Contact the Emerson Law Firm today for more information.
See Related Blog Posts:
How Does Consumer Debt Collection Work?
How Does Bankruptcy Impact Foreclosures and Evictions?
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