If you are married and file a joint bankruptcy petition with your spouse, you may be entitled to double certain exemptions on your assets. How much you can exempt depends on which state you live in. Read on to find out whether you can double exemptions, the limitations of doubling, and what exactly this all means.
What Are Exemptions in Bankruptcy?
Filing bankruptcy does not mean that you have to give up all of your property. Through exemptions, you can keep a certain amount of your assets safe in Chapter 7 bankruptcy. Many exemptions protect specific types of property, such as a motor vehicle or your wedding ring. Sometimes an exemption protects the entire value of the asset. Other times, an exemption protects up to a certain dollar amount of an asset.
(To learn more, including how exemptions work in Chapter 13 bankruptcy, see our Bankruptcy Exemptions topic area.)
By doubling, you and your spouse can each claim an exemption against the same asset. That means if you and your spouse each have a $10,000 homestead exemption available, the two of you can stack the exemptions and claim up to $20,000 on your home. Doubling is usually only allowed on property that you jointly own with your spouse. You and your spouse cannot double an exemption on property if one of you does not own it.
Are You Eligible for Doubling?
Exemption doubling is not available in every state. Doubling is only allowed in:
- states that allow you to take federal exemptions, or
- states that have opted out of the federal exemption system but allow doubling under their state exemption system.
Doubling When Using the Federal Exemptions
The federal exemption scheme provides for doubling. That means you can protect a great deal of property if you and your spouse own it together. As of April 1, 2013 the federal bankruptcy homestead exemption is $22,975. With doubling, you and your spouse can protect up to $45,950 against the equity in your home.
(Learn more about the Homestead Exemption in Bankruptcy.)
Restrictions in Dual Exemption States
There are some limits to doubling. If you live in a state that gives you a choice between federal exemptions or state exemptions, such as Michigan, you cannot cherry pick from both sets of exemptions. You have to follow one scheme entirely. That means if your state homestead exemption is higher than the federal version but does not allow for doubling, you cannot use the federal exemption to double the state exemption.
State-Only Exemptions and Doubling
Not every state allows for doubling. If you live in a state that does not let you use the federal exemptions, its own bankruptcy exemption laws may not allow doubling. One such example is California. That may not always be a bad thing. For example, even without doubling, California's homestead exemption is more favorable than the federal scheme because you can exempt up to $125,000 in equity.
Other states that have opted out of the federal exemption scheme, like Ohio and Nevada, still allow you to double exemptions under their state bankruptcy exemption system. For example, in Ohio, you are entitled to a homestead exemption of $132,900 (as of April 1, 2013). If you jointly own the home with your spouse, you and your spouse can double the exemption, up to $265,800.
Some states allow you to double some exemptions, and not others.
To find the exemptions that apply in your state, visit our Bankruptcy Exemptions by State topic page and click on your state.
Restrictions on Doubling
As with the federal scheme, there are some limits to doubling in a state-only exemption system. If you do not own the property, you cannot claim an exemption. For example, in Ohio, you are entitled to a motor vehicle exemption of $3,225. If only your spouse's name is on the car title, only your spouse can claim this exemption. You cannot double it.