The Homestead Exemption in Bankruptcy

The homestead exemption protects your home equity in bankruptcy.

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Whether you can protect your home is a big question for many people considering bankruptcy. Many states allow bankruptcy filers to protect some or all of the equity in their home in Chapter 7 bankruptcy. This protection is called the homestead exemption. The homestead exemption comes into play in Chapter 13 bankruptcy too. If you can exempt all or most of your home equity, this will decrease the minimum amount you must pay to your unsecured creditors -- which makes it easier to afford a repayment plan.

Homestead exemptions vary widely by state. For example:

  • A few states allow you to exempt all of your home equity, no matter how large. Others protect only a small amount of equity. 
  • Some states allow married couples filing joint bankruptcy to double the homestead exemption amount. Others do not.
  • Some states require you to file a homestead declaration in order to take advantage of the homestead exemption in bankruptcy.
  • Most states require you to use the state homestead exemption amount. A few allow you to choose between your state and the federal homestead exemption.

To learn about the homestead exemption in your state, start with our overview articles and then read the article about your state in particular. Each state article has information about the state's homestead exemption amount, what types of property it applies to, whether married filers can double the exemption, where you can find the state's homestead exemption laws (so you can go right to the source if necessary), and more.

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