Good news for the self-employed in Oregon. The bankruptcy exemption for your “tools of the trade” protects has increased from $3,000 to $5,000 per person. That exemption shields your business tools and equipment from the bankruptcy trustee and your creditors. This change was made during Oregon’s 2011 Legislative Session.
This exemption applies to each self-employed person who files for bankruptcy protection. For example, if a married couple files bankruptcy and both spouses are self-employed (whether in the same business or two separate businesses), then each spouse can claim this protection, for a total of up to $10,000.
This protection applies to equity in your tools and equipment. If your equipment is subject to a lien, the amount you “own” is lowered by the balance of the loan, so there is less equity to protect.
Finally, assets are valued in bankruptcy at their current sale value, not the original cost. You may have spent a large amount of money on your tools and equipment. But, in bankruptcy, all that matters is what the equipment is currently worth, it its current condition. Many items plummet in value after purchase.
If you would more information about the “tools of the trade” exemption and how a bankruptcy filing might affect your business, please contact us.