In cases where a creditor is suing a debtor for outstanding debt, the court may allow the creditor to seize some of the debtor’s property in order to meet the debt. This is called “property levy”, and is issued in connection with the court’s judgment for the claim.

In some cases however, the debtor can file for a “claim of exemption”, which protects their property from seizure because it is “exempt” from the levy. The definition of exempt property is outlined by state law, and various other factors depending on the case. The debtor needs to file for the exemption quickly, as court deadlines are usually quite specific and enforced strictly.

How can I Obtain a Claim of Exemption?

When the debtor is notified of the property levy, it will usually include instructions on how to file a claim of exemption. The debtor will need to fill out the claim of exemption and send a copy to their creditor who is levying against them. In some states, the debtor may also have to send a copy to the officer who is seizing the property (usually a sheriff).

In many cases, the creditor will not challenge the claim of exemption because it may be too much of a hassle or will cost them too much additional money to do so. If they abandon their property levy claim, the debtor’s property or wages won’t be subject to seizure.

What is a Claim of Exemption Hearing?

In some cases however, the creditor may challenge the exemption claim. In this case, the parties may need to resolve their issues through a claim of exemption hearing. This is where the debtor must present evidence to prove that their property is exempt from the levy.

Some property is automatically exempt under state laws, such as:

  • Certain household goods (up to $5,000) and some clothing (up to $1,000)
  • Various prescription drugs and medical aids/devices
  • A certain amount of home and vehicle equity

Additionally, the debtor can claim exemption for some property if they can prove that seizure of the property will cause them serious financial hardship. Exemptions may also be available for property that is necessary to support the debtor and their household. For instance, this can include a family business vehicle or tools that are used in a family construction business. The debtor will need to provide documentation in support of their claims.

If the court approves of the exemption, they may allow the property to be excused from seizure. Alternatively, they may approve negotiations for alternate repayment plans for the debt that is owed.

Should I Hire a Lawyer for Help with a Claim of Exemption?

Property levies and claims of exemptions can be very complex, and typically require the assistance of a lawyer. You may need to hire a finance attorney in your area if you need assistance with a claim of exemption. Your lawyer can guide you with the various forms and paperwork needed for the exemption, and can also provide additional legal research if needed. If you need to attend a claim of exemption hearing, your lawyer can also represent you during court as needed.