In the case of an individual the basic premise under chapter 7 is that a debtor surrenders his non exempt assets in return for a discharge of his debts. That leads to the obvious question: What is exempt, and what is not? If a debtor has lived in New Hampshire for more than two years he can choose either the federal exemptions or those provided for under New Hampshire law.
The federal exemptions are provided in section 522(d) as follows:
- The following property may be exempted under subsection (b)(2) of this section:
- The debtor’s aggregate interest, not to exceed $22,975 in value, in real property or personal property that the debtor or a dependent of the debtor uses as a residence, in a cooperative that owns property that the debtor or a dependent of the debtor uses as a residence, or in a burial plot for the debtor or a dependent of the debtor.
- The debtor’s interest, not to exceed $3,675 in value, in one motor vehicle.
- The debtor’s interest, not to exceed $575 in value in any particular item or $12,250 in aggregate value, in household furnishings, household goods, wearing apparel, appliances, books, animals, crops, or musical instruments, that are held primarily for the personal, family, or household use of the debtor or a dependent of the debtor.
- The debtor’s aggregate interest, not to exceed $1,550 in value, in jewelry held primarily for the personal, family, or household use of the debtor or a dependent of the debtor.
- The debtor’s aggregate interest in any property, not to exceed in value $1,225 plus up to $11,500 of any unused amount of the exemption provided under paragraph (1) of this subsection.
- The debtor’s aggregate interest, not to exceed $2,300 in value, in any implements, professional books, or tools, of the trade of the debtor or the trade of a dependent of the debtor.
- Any unmatured life insurance contract owned by the debtor, other than a credit life insurance contract.
- The debtor’s aggregate interest, not to exceed in value $12,250 less any amount of property of the estate transferred in the manner specified in section 542 (d) of this title, in any accrued dividend or interest under, or loan value of, any unmatured life insurance contract owned by the debtor under which the insured is the debtor or an individual of whom the debtor is a dependent.
- Professionally prescribed health aids for the debtor or a dependent of the debtor.
- The debtor’s right to receive—
- a social security benefit, unemployment compensation, or a local public assistance benefit;
- a veterans’ benefit;
- a disability, illness, or unemployment benefit;
- alimony, support, or separate maintenance, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor;
- a payment under a stock bonus, pension, profitsharing, annuity, or similar plan or contract on account of illness, disability, death, age, or length of service, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor, unless—
- such plan or contract was established by or under the auspices of an insider that employed the debtor at the time the debtor’s rights under such plan or contract arose;
- such payment is on account of age or length of service; and
- such plan or contract does not qualify under section 401(a), 403(a), 403(b), or 408 of the Internal Revenue Code of 1986.
- The debtor’s right to receive, or property that is traceable to—
- an award under a crime victim’s reparation law;
- a payment on account of the wrongful death of an individual of whom the debtor was a dependent, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor;
- a payment under a life insurance contract that insured the life of an individual of whom the debtor was a dependent on the date of such individual’s death, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor;
- a payment, not to exceed $22,975 on account of personal bodily injury, not including pain and suffering or compensation for actual pecuniary loss, of the debtor or an individual of whom the debtor is a dependent; or
- a payment in compensation of loss of future earnings of the debtor or an individual of whom the debtor is or was a dependent, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor.
- Retirement funds to the extent that those funds are in a fund or account that is exempt from taxation under section 401, 403, 408, 408A, 414, 457, or 501(a) of the Internal Revenue Code of 1986.
The New Hampshire state exemptions are as follows:
The following goods and property are exempted from attachment and execution:
- The wearing apparel necessary for the use of the debtor and the debtor's family.
- Comfortable beds, bedsteads and bedding necessary for the debtor, the debtor's spouse and children.
- Household furniture to the value of $3,500.
- One cook stove, one heating stove and one refrigerator and necessary utensils belonging to the same.
- One sewing machine, kept for use by the debtor or the debtor's family.
- Provisions and fuel to the value of $400.
- The uniform, arms and equipments of every officer and private in the militia.
- The Bibles, school books and library of any debtor, used by the debtor or the debtor's family, to the value of $800.
- Tools of the debtor's occupation to the value of $5,000.
- One hog and one pig, and the pork of the same when slaughtered.
- Six sheep and the fleeces of the same.
- One cow; a yoke of oxen or a horse, when required for farming or teaming purposes or other actual use; and hay not exceeding 4 tons.
- Domestic fowls not exceeding $300 in value.
- The debtor's interest in one pew in any meetinghouse in which the debtor or the debtor's family usually worship.
- The debtor's interest in one lot or right of burial in any cemetery.
- One automobile to the value of $4,000.
- Jewelry owned by the debtor or the debtor's family to the value of $500.
- The debtor's interest in any property, not to exceed $1,000 in value, plus up to $7,000 of any unused amount of the exemptions provided under paragraphs III, VI, VIII, IX, XVI, and XVII of this section. XIX. Subject to the Uniform Fraudulent Transfer Act, RSA 545-A, any interest in a retirement plan or arrangement qualified for tax exemption purposes under present or future acts of Congress; provided, any transfer or rollover contribution between retirement plans shall not be deemed a transfer which is fraudulent as to a creditor under the Uniform Fraudulent Transfer Act. "Retirement plan or arrangement qualified for tax exemption purposes'' shall include without limitation, trusts, custodial accounts, insurance, annuity contracts, and other properties and rights constituting a part thereof. By way of example and not by limitation, retirement plans or arrangements qualified for tax exemption purposes permitted under present acts of Congress include defined contribution plans and defined benefit plans as defined under the Internal Revenue Code (IRC), individual retirement accounts including Roth IRAs and education IRAs, individual retirement annuities, simplified employee pension plans, Keogh plans, IRC section 403(a) annuity plans, IRC section 403(b) annuities, and eligible state deferred compensation plans governed under IRC section 457. This paragraph shall be in addition to and not a limitation of any other provision of New Hampshire law which grants an exemption from attachment or execution and every other species of forced sale for the payment of debts. This paragraph shall be effective for retirement plans and arrangements in existence on, or created after January 1, 1999, but shall apply only to extensions of credit made, and debts arising, after January 1, 1999.
Every person is entitled to $100,000 worth of his or her homestead, or of his or her interest therein, as a homestead. The homestead right created by this chapter shall exist in manufactured housing, as defined by RSA 674:31, which is owned and occupied as a dwelling by the same person but shall not exist in the land upon which the manufactured housing is situated if that land is not also owned by the owner of the manufactured housing.
The attorney should examine the assets of the debtor carefully before advising which exemption scheme to choose. If an individual debtor owns real estate which has equity greater than $11,000 they should probably choose the state exemptions. On the other hand if the debtor has a personal injury claim, or has a life insurance policy with a cash value every effort should be made to utilize the federal exemptions. A debtor who does not own any real estate is almost always better off choosing the federal exemption because of the considerably higher “wildcard” exemption.
In a jointly filed case the attorney should also determine who is the actual owner of each asset since the “wildcard” exemption cannot be transferred between spouses. For example if the title to a vehicle is in the wifes name, only her exemptions may be used to protect the vehicle.
After a chapter 7 case is file a trustee is assigned to the case. The Office of the United States Trustee establishes a panel of trustees for each district. There are presently eight active trustees on the panel in New Hampshire. It is the trustees job to conduct the meeting of creditors and to determine if there are any assets to administer for the benefit of creditors.