You don’t lose all of your property when you file for bankruptcy. In fact, many people can protect most, if not all of what they own. You’ll know what you can keep by reviewing bankruptcy exemption law.
In this article, you’ll learn:
The federal bankruptcy exemption amounts adjust every three years with the next adjustment occurring April 2019.
Each state has a set of bankruptcy exemptions that a bankruptcy filer can use to protect assets in bankruptcy. Federal law also has a set of federal bankruptcy exemptions. Exemptions protect property in both Chapter 7 and Chapter 13.
Your state determines whether you must use your state’s exemptions or if you can choose the federal list instead. If you get to choose, you must pick one or the other—you can’t mix and match items from both lists.
Currently, if you live in one of the following states, you can choose the state or the federal bankruptcy exemptions:
Alaska, Arkansas, Connecticut, District of Columbia, Hawaii, Kentucky, Massachusetts, Michigan, Minnesota, New Hampshire, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Texas, Vermont, Washington, and Wisconsin.
If you don't reside in one of these states, you're limited to your own state’s exemptions. Some states allow two state choices—for example, see California’s exemption scheme.
You’ll find current, commonly-used federal exemptions listed below. If you are a married couple filing jointly, you can double the exemption amounts. The amounts are accurate as of April 2016 and will change April 2019.
You can currently protect $23,675 of equity in your principal place of residence under the federal exemptions (you must live in the home to use the homestead exemption). The residential property can be:
The homestead exemption isn’t available to protect 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 $1,283,025 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, $1,250 plus $11,850 of any unused portion of your homestead exemption is available to exempt any property of your choosing. (To learn more, the Wildcard Exemption).
Updated: September 27, 2018