The Federal Bankruptcy Exemptions

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:

• which states let you choose the federal bankruptcy exemptions
• the federal bankruptcy exemption amounts, and
• where to find your state's exemptions.

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.

Who Can Use Federal Bankruptcy Exemptions

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.

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.

Property Protected With Federal Bankruptcy Exemptions

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.

The Homestead Exemption Protects Your Residence

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:

• a house or another dwelling, such as a condominium, or
• personal property used as a residence (such as a residential trailer).

The homestead exemption isn't available to protect the equity in investment or rental properties.

Personal Property Exemptions Protect Your Belongings

Personal property includes all property you have other than real estate. Here are some commonly-used federal personal property exemptions:

• $4,000 for your motor vehicle. (11 USC § 522(d)(2).)
• $1,700 for jewelry. (§ 522(d)(4).)
• $625 per individual item with a $13,400 aggregate value on household goods, furnishings, appliances, clothes, books, animals, crops, musical instruments. (11 USC § 522(d)(3).)
• $2,525 for tools of the trade, including implements and books
• health aids. (11 USC § 522(d)(6).)
• $13,400 in loan value, accrued dividends, or interest in a life insurance policy. (11 USC § 522(d)(8).)

Support or Benefit Exemptions

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

Exemptions Protecting Personal Injury Recovery

• $25,150 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 you need for support
• any recovery for the wrongful death of the person you relied on for support, and
• all compensation received due to being a crime victim.

Retirement Account Protections

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.

Wildcard Exemption

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.

Need More Help?

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