Nolo's Plain-English Law Dictionary
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- Homestead Exemption
An exemption from liability given to all or a portion of a primary residence. In most states, only a portion of the homeowner's equity, such as $20,000, can be protected from a bankruptcy trustee or creditors who wish to sell the home to pay off debts owed by the homeowner. Other states exempt all of a homeowner's primary residence from repayment of debts, and still other states exempt all of a homeowner's primary residence only if it is under a certain size.
Learn more about how this exemption can protect your home equity in bankruptcy.