We have had many clients asking about bankruptcy exemptions during the pandemic. During COVID-19, a large number of people were forced to transition to working at a home office. In this process, a large amount of home office equipment was purchased to make it easier to work from home. Is home office equipment exempt in bankruptcy? The answer is usually “Yes.”
Home office equipment is usually protected in bankruptcy due to most states’ “wild card” and general personal property exemptions. For instance, in the state of Indiana, there is a “wild card” exemption that protects all personal property as long as the total value does not exceed $10,250. In almost all cases in Indiana, all of your home office equipment would be exempt and protected within this amount.
The relatively low resale value of home office equipment will protect home office equipment. Most computer setups are worth less than $2,000 in resale value. The bankruptcy trustee is usually looking for large assets to administer. It is very rare for a bankruptcy trustee to move against any personal items, including home office equipment. The lower resale value of home office equipment almost always makes it exempt in bankruptcy.
A larger office operation or high-end home equipment may not be protected in bankruptcy. These high-end home office items may not be exempt. An example of this may be somebody that purchases an $8,000 computer system for film editing. Another example may be a person who keeps substantial inventories that they sell in relation to their home-based business. If you simply run your business from home or remote work from home, these basic home-office setups will not have any problem. Remember, with property being exempt in bankruptcy, it all has to do with the resale value of the property.
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