What are bankruptcy exemptions?
When you file Chapter 7 bankruptcy, the trustee can sell your non-exempt property to pay creditors. Exemptions are the legal protections that let you keep essential property -- your home, your car, your clothes, your retirement savings.
Under 11 U.S.C. § 522, each debtor can claim exemptions in property of the estate. Which exemptions you can use depends on where you live. Some states let you choose between federal and state exemptions. Others require you to use state law only.
In Chapter 13, exemptions matter differently. You keep all your property, but the value of your non-exempt assets sets a floor for how much you must pay unsecured creditors through your plan (the "best interests" test under 11 U.S.C. § 1325(a)(4)).
11 U.S.C. § 522(b)(1): A debtor may exempt property listed in paragraph (2) [federal exemptions] or, in the alternative, paragraph (3) [state law exemptions], unless the State law applicable to the debtor specifically does not authorize the federal exemptions.
Explore exemptions by category
Federal Exemptions
The federal exemption scheme under 11 U.S.C. § 522(d). Available in 17 states. Complete dollar amounts.
Homestead Exemptions
How much home equity each state protects. From $0 to unlimited. The most important exemption for homeowners.
Vehicle Exemptions
How much vehicle equity is protected state by state. Most states allow $2,500 to $7,500 per vehicle.
Wildcard Exemptions
Flexible exemptions you can apply to any property. Some states offer generous wildcards worth $10,000+.
Retirement Exemptions
401(k)s, IRAs, pensions, and other retirement accounts are among the best-protected assets in bankruptcy.
Personal Property
Clothing, household goods, tools of the trade, and other personal property exemptions.
Opt-Out States
33 states have opted out of federal exemptions. Find out if your state requires state-law exemptions.
FAQ
Common questions about exemptions, domicile requirements, joint filing, and exemption planning.
Key exemption concepts
Equity, not value
Exemptions protect equity, not total value. If your home is worth $300,000 and you owe $280,000 on the mortgage, you have $20,000 in equity. That $20,000 is what the exemption protects. If your state homestead exemption is $25,000, your home is fully protected.
Domicile requirements
Under 11 U.S.C. § 522(b)(3)(A), you must use the exemptions of the state where you have been domiciled for the 730 days (2 years) before filing. If you moved recently, you may be required to use your former state's exemptions. This rule prevents forum shopping -- moving to a state with better exemptions just before filing.
Joint filing doubles exemptions
When married couples file jointly, each spouse can claim their own set of exemptions. In many states, this effectively doubles the protection. A joint filing couple can protect twice the homestead equity, twice the vehicle equity, and twice the personal property.
Exemption planning is legal but has limits. Converting non-exempt property to exempt property before filing (like paying down your mortgage) is generally allowed. But doing it with intent to defraud creditors can result in denial of discharge under 11 U.S.C. § 727(a)(2). The line between smart planning and fraud depends on the facts. Consult an attorney.
Most Chapter 7 filers keep everything they own. Over 70% of Chapter 7 cases are no-asset cases, meaning the debtor's exemptions cover all their property. The trustee files a no-asset report and the case proceeds to discharge.