Are you confused about whether you'll use the state or federal bankruptcy exemptions to protect property in bankruptcy? Each state decides whether a filer must use the state's bankruptcy exemptions or whether a filer can use the federal bankruptcy exemptions instead. In this article, you'll learn:
If you'd like more insight into your bankruptcy case, try our 10-question bankruptcy quiz—it will identify potential issues while explaining the basics of bankruptcy. Or try this overview of the bankruptcy filing process—it's filled with helpful examples.
Currently, the following states allow filers to choose between the state or the federal bankruptcy exemptions. If your state allows you to choose, you must pick one list or the other—you can't mix and match items from both lists. Filers who use state exemptions can also use the federal nonbankruptcy exemptions.
|Alaska||Kentucky||New Jersey||Rhode Island|
The links above will take you to a complete state bankruptcy guide. If you don't reside in one of these states, you're limited to your own state's exemptions. You'll find state exemptions here.
Important Note. Although exemptions apply in Chapters 7 and 13, what happens to nonexempt property—assets not protected by an exemption—will depend on the bankruptcy chapter. Be sure you understand how bankruptcy exemptions work in Chapter 7 and exemptions in Chapter 13.
You'll find commonly-used federal exemptions below. If you are a married couple filing jointly, you can double the exemption amounts. The amounts apply to cases filed between April 1, 2019, and April 1, 2022.
You can protect $25,150 of equity in your principal place of residence under the federal exemptions. (11 USC § 522(d)(1).) You must live in the home to use the homestead exemption.
The residential property can be:
The homestead exemption isn't available to protect the equity in investment or rental properties.
Personal property includes all property you have other than real estate. Here are some commonly-used federal personal property exemptions:
Retirement accounts that are exempt from taxation are fully exempt. However, IRAs and Roth IRAS are capped at $1,362,800 on IRAs and Roth IRAs. Learn more in Your Retirement Plan in Bankruptcy.
You can apply the federal wildcard exemption to any property you own. Currently, $1,325 plus $12,575 of any unused portion of your homestead exemption is available to exempt any property of your choosing. (11 USC § 522(d)(5).) To learn more, see the Wildcard Exemption.
You might not know this, but Nolo has been making the law easy for over fifty years. If you have questions, use the links we've included throughout for more details. Otherwise, you'll find the answers to almost all of your bankruptcy questions at www.nolo.com/legal-encyclopedia/bankruptcy.
Providing all information needed to file for bankruptcy is beyond the scope of this article. If you'd like to file without an attorney, consider buying a self-help book like The New Bankruptcy by Attorney Cara O'Neill to help you make well-informed decisions about your bankruptcy matter.
Updated September 2, 2021