Tools of the Trade Exemption Revisited
Image Credit: Peter Firminger
We have discussed the role of Nebraska exemptions before. A debtor uses exemptions in a Nebraska Bankruptcy to save certain property from being sold by the bankruptcy trustee. An exemption often used in Nebraska bankruptcy cases is the tools of the trade exemption. This exemption allows a debtor to exempt, or save, up to $2,400 of equity in tools of the debtor’s trade and/or a vehicle used by the debtor for business or employment or to commute to a business or employment.
The Nebraska tool of the trade exemption statute is as follows:
25-1556. Specific exemptions; personal property; selection by debtor:
No property hereinafter mentioned shall be liable to attachment, execution,or sale on any final process issued from any court in this state, against any person being a resident of this state: . . . (4) the debtor’s interest, not to exceed an aggregate fair market value of two thousand four hundred dollars, in implements, tools, or professional books or supplies held for use in the principal trade or business of such debtor or his or her family, which may include one motor vehicle used by the debtor in connection with his or her principal trade or business or to commute to and from his or her principal place of trade or business[.] (Emphasis added.)
It would appear that under a clear reading of the statute that a Debtor would only be entitled to take the exemption if he or she was employed.
Unemployed now entitled to exemption?
The Bankruptcy Court for the District of Nebraska recently held that “a debtor need not be currently employed in order to claim a tool of the trade exemption in a vehicle, as long as there is evidence the debtor is only temporarily unemployed as of the petition date and intends to resume working.” Angelita J. Quintero, Ch. 7, BK12-81257-TJM (Aug. 22, 2012)
What does this mean?
This decision greatly protects unemployed Nebraska debtors from the chance of losing their vehicle while looking for a job. This decision doesn’t protect the stay at home parent, retired, and those debtors whose unemployment is less than temporary so it is imperative to review your situation with a qualified bankruptcy attorney to determine the best approach and use of the tool of the trade exemption.