Filing for bankruptcy without losing the clothes on your back

Just last week I was attending a meeting of creditors with one of my clients on a Massachusetts bankruptcy case, and we were watching the trustee handle a previous case involving a “pro se” debtor — a do-it yourselfer not represented by an attorney.

Well this poor fellow just about got torn apart by the trustee, as he hadn’t filled out any part of the forms correctly. Particularly galling was that he had declared nothing — $0 — for clothing, although he obviously had some, and thankfully had brought enough with him!

Rookie mistakes like these are everyday occurrences with people who file pro-se bankruptcy cases, but this debtor’s problem raises a larger question — how do you make sure you don’t literally lose your shirt when filing for bankruptcy?

Wearing apparel is declared on line six of Schedule B on the official bankruptcy forms. Used clothing doesn’t have to be valued at more than yard sale prices, although items worth several hundred dollars by themselves (a wedding dress or tuxedo, for example) should be listed individually.

Both Massachusetts and New Hampshire provide virtually unlimited exemptions for clothing, so as long as its properly declared, no one needs to lose their shirt going bankrupt. Even if you use the federal list of exemptions, clothing is considered along with other “household goods” and you will be able to declare exempt more than $11,000 in this category per person.


By Doug Beaton

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