The Federal Bankruptcy Exemptions

You probably know that federal bankruptcy exemptions protect property in bankruptcy. But do you know whether you can use the federal exemptions if you decide to file for bankruptcy? The simple answer is that your state decides whether you must use your state's bankruptcy exemptions or whether you can choose the federal bankruptcy exemptions instead.

Keep reading to discover which states allow filers to use federal bankruptcy exemptions, where to find your state's bankruptcy exemptions, and the amounts of federal bankruptcy exemptions. Once you understand your options, make a list of everything you own and, if given a choice, select the set of exemptions that will protect the assets you'd like to retain.

What Do Federal Bankruptcy Exemptions Protect?

Below, you'll find the property protected by commonly used federal exemptions, along with the amount of equity you can protect in each asset. If you are a married couple filing jointly, you can double the exemption amounts.

Before using the exemptions, you should verify that you meet the requirements by reading the statute itself. You can find the federal bankruptcy exemption statutes at 11 USC § 522, but be aware that the amounts reflected in the statute aren't current. Current amounts are updated every three years and published in the Federal Register. The statutory amounts listed in this article apply to cases filed between April 1, 2025, and April 1, 2028.

The Federal Bankruptcy Homestead Exemption Protects Your Residence

The federal homestead exemption will protect $31,575 of equity in your principal residence, which includes a residential house or any dwelling you live in, such as a condominium, as well as personal property used as a residence, like a trailer. (11 USC § 522(d)(1).) The federal homestead exemption only applies to residences and can't be used to protect equity in investment or rental properties.

The Federal Bankruptcy "Wildcard" Exemption

You can apply the federal wildcard exemption to any property you own. Currently, $1,675 plus $15,800 of any unused portion of your homestead exemption is available to exempt any property you choose. (11 USC § 522(d)(5).)

Your Belongings

Here are some commonly used federal "personal property" exemptions (personal property is everything other than real estate):

• $5,025 for your motor vehicle. (11 USC § 522(d)(2).)
• $1,875 for jewelry. (11 USC § 522(d)(4).)
• $800 per individual item with a $16,850 aggregate value on household goods, furnishings, appliances, clothes, books, animals, crops, and musical instruments. (11 USC § 522(d)(3).)
• $3,175 for tools of the trade, including implements and books
• health aids. (11 USC § 522(d)(6).)
• $16,850 in loan value, accrued dividends, or a life insurance policy interest. (11 USC § 522(d)(8).)

Domestic Support and Public Benefits

• spousal support or child support you reasonably need for your support
• life insurance payments required for your support, and
• all Social Security benefits, unemployment benefits, veteran's benefits, public assistance, and disability or illness benefits.

Personal Injury Recoveries

• $31,575 for personal injury, except for pain and suffering or monetary loss. (11 USC § 522(d)(11)(D).)
• any award for the loss of future earnings needed for support
• any recovery for the wrongful death of the person relied on for support, and
• all compensation received due to being a crime victim.

Retirement Accounts

Retirement accounts that are exempt from taxation are fully exempt from bankruptcy creditors. However, the federal bankruptcy exemption limit for IRAs and Roth IRAS is $1,711,975. (11 USC § 522(n).) Learn more about your retirement plan in bankruptcy.

Who Can Use Federal Bankruptcy Exemptions?

Currently, the following states allow filers to choose between state and federal bankruptcy exemptions. If your state gives you a choice, you must pick one list or the other. You can't mix and match items from both lists.

Debtors who file in Alaska, Hawaii, Minnesota, the District of Columbia, Puerto Rico, and the Virgin Islands can use the federal exemptions. Filers electing to use state exemptions can supplement with the federal nonbankruptcy exemptions.

What Happens to Property Not Protected By a Bankruptcy Exemption?

Although exemptions apply in Chapters 7 and 13, what happens to "nonexempt property" or assets not protected by an exemption will depend on the bankruptcy chapter. If you file for Chapter 7 bankruptcy, you'll keep all "exempt" property covered by a bankruptcy exemption and lose any nonexempt assets. In Chapter 13, you'll keep all your property, but you'll pay your creditors for nonexempt assets through the Chapter 13 plan.

Use these links to learn more about how bankruptcy exemptions work in Chapter 7 and how exemptions work in Chapter 13.

Need More Bankruptcy Help?

Did you know Nolo has made the law accessible for over fifty years? It's true, and we wholeheartedly encourage research and learning. You can find many more helpful bankruptcy articles on Nolo's bankruptcy homepage. For instance, Nolo articles will explain what bankruptcy can do, what you'll want to avoid before filing for bankruptcy, and more. Information needed to complete the official downloadable bankruptcy forms is on the Department of Justice U.S. Trustee Program website.

However, online articles and resources can't address all bankruptcy issues and aren't written with the facts of your particular case in mind. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.