The Federal Bankruptcy Exemptions

Some states allow you to use the federal bankruptcy exemptions rather than your state's exemptions. Find out if you can use the federal exemptions and what property is protected.

By , Attorney

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 your state decides if you'll use your state's bankruptcy exemptions or if you can pick the federal bankruptcy exemptions instead. Here's what you'll need to know to get started:

  • the states that let filers use the federal bankruptcy exemptions
  • where you can find your state's bankruptcy exemptions, and
  • the federal bankruptcy exemption amounts.

Once you know your options, you'll make a list of everything you own and pick the exemption set that will cover the assets you'd like to keep.



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 gives you a choice, 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 Michigan Pennsylvania
Arkansas Minnesota Rhode Island
Connecticut New Hampshire Texas
Dist Columbia New Jersey Vermont
Hawaii New Mexico Washington
Kentucky New York Wisconsin
Massachusetts Oregon

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.

What Happens to Property a Bankruptcy Exemption Doesn't Protect?

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.

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 of your property, but you'll pay your creditors for nonexempt assets through the Chapter 13 plan.

Be sure you understand how bankruptcy exemptions work in Chapter 7 and how exemptions work 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, 2022, and April 1, 2025.

The Federal Bankruptcy Homestead Exemption Protects Your Residence

You can protect $27,900 of equity in your principal 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.

These Federal Bankruptcy Exemptions Protect Your Belongings

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

  • $4,450 for your motor vehicle. (11 USC § 522(d)(2).)
  • $1,875 for jewelry. (§ 522(d)(4).)
  • $700 per individual item with a $14,875 aggregate value on household goods, furnishings, appliances, clothes, books, animals, crops, musical instruments. (11 USC § 522(d)(3).)
  • $2,800 for tools of the trade, including implements and books
  • health aids. (11 USC § 522(d)(6).)
  • $14,875 in loan value, accrued dividends, or a life insurance policy interest. (11 USC § 522(d)(8).)

Federal Bankruptcy Exemptions Protect 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.

Exempting Personal Injury Recoveries

  • $27,900 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.

Federal Bankruptcy Exemptions Protect Many Retirement Accounts

Retirement accounts that are exempt from taxation are fully exempt in bankruptcy. However, the federal bankruptcy exemption limit for IRAs and Roth IRAS is $1,512,350. Learn more in Your Retirement Plan in Bankruptcy.

"Wildcard" Federal Bankruptcy Exemption

You can apply the federal wildcard exemption to any property you own. Currently, $1,475 plus $13,950 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 Bankruptcy Help?

Did you know Nolo has been making the law easy for over fifty years? It's true—and we want to make sure you find what you need. Below you'll find more articles that explain what bankruptcy is and how bankruptcy works. And don't forget that our bankruptcy homepage is the best place to start if you have other questions!

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We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.

Updated March 15, 2022

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