Legal Definitions - exemption law

Definition: Exemption law refers to a law that specifies which property of a debtor cannot be taken by a creditor or trustee in bankruptcy to pay off a debt. This property is known as exempt property.

Exempt Property: Exempt property is the property that a creditor cannot take away from a debtor to pay off a debt. This is because the law protects certain types of property from being seized by creditors. For example, many states have a homestead exemption that protects a person's house and household items up to a certain amount from being taken by creditors. The purpose of this exemption is to prevent debtors from becoming destitute.

Examples: If a person owes money to a creditor, the creditor cannot take away their house or household items that are protected by the homestead exemption. Similarly, if a person dies and leaves behind personal property, their surviving spouse is automatically entitled to receive certain items from the estate, which is an example of exempt property.

Explanation: These examples illustrate how exemption law protects certain types of property from being taken by creditors or trustees in bankruptcy. The homestead exemption ensures that a person's home and household items are protected from being seized by creditors, while the exemption for surviving spouses ensures that they receive certain personal property from the estate of their deceased spouse.