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Bankruptcy laws differ by state

Washington, D.C., residents are more likely to keep their vehicles during a debt relief proceeding, but they are also subject to rules that could lead to the garnishment of 25 percent of their wages. Bankruptcy code throughout the region - and throughout the nation - varies so widely that Washingtonians are unlikely to have the same experiences as even their neighbors in Virginia and Maryland. In fact, your location determines whether debt collectors can seize your paycheck, bank accounts, vehicle and other assets, according to expert reports.

New information from the National Consumer Law Center shows that a wide variety of exemption laws protect struggling families from predatory creditors, but these patchwork regulations often fail to meet even basic provisions that would actually help those declaring bankruptcy. This advocacy group found that few locations protect at least $1,000 in bank account value. In addition, few jurisdictions prevent creditors from seizing important assets such as vehicles, furniture, houses and even everyday wages.

In fact, just two states even come close to meeting those requirements: Massachusetts and Iowa. Even those states provided relatively inadequate protection, with each only achieving a B-plus in the advocacy center's ratings. Washington, D.C., is generally intent on protecting its residents' homes, as creditors are prevented from seizing that asset. In nearby Maryland, though, only houses worth $6,000 or less are eligible for protection under bankruptcy law.

Ultimately, most jurisdictions within the U.S. could use an update to their bankruptcy code; instead of protecting cows and an ox, these laws should shield important assets such as functioning vehicles and computers, both of which are necessary for career success in the new age. Even though federal laws do a good job of protecting personal assets during bankruptcy, many states have simply fallen behind the times.

Those who are considering seeking bankruptcy protection should know the laws in their jurisdictions. Therefore, the assistance of a qualified bankruptcy attorney is absolutely essential in succeeding through this process.

Source: www.njeffersonnews.com, "Report: Debt protection varies widely by state" Danielle Douglas, Oct. 10, 2013

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