The Federal Nonbankruptcy Exemptions

In addition to the bankruptcy exemptions, you might be able to take advantage of certain other exemptions called "federal nonbankruptcy exemptions." These exemptions are found outside the bankruptcy code and can help you protect your property when you file for bankruptcy. Read on to learn about the federal nonbankruptcy exemptions and how they can help you save your assets in bankruptcy.

How Are Nonbankruptcy Exemptions Different From Bankruptcy Exemptions?

The federal nonbankruptcy exemptions are just like the bankruptcy exemptions in that they help you to prevent certain assets from being taken and sold by the Chapter 7 bankruptcy trustee to pay your creditors. In Chapter 13, you use the exemptions to lower the amount you'd pay creditors through the Chapter 13 plan.

However, unlike bankruptcy exemptions, they are harder to qualify for and use because they usually require membership in a certain occupation or other specialized group.

Do I Qualify To Use The Federal Nonbankruptcy Exemptions?

You can only use the federal nonbankruptcy exemptions if you choose to use your state's exemption system in bankruptcy (federal nonbankruptcy exemptions are allowed in addition to your state exemptions). So the first step in determining if you can use the federal nonbankruptcy exemptions is to determine whether your state allows you to choose between the federal bankruptcy exemptions and its own state exemption system.

Many states require you to use their own exemption laws and disallow federal bankruptcy exemptions altogether. So if you live in one of these states, then you know you can use the federal nonbankruptcy exemptions. If your state gives you a choice between its state exemptions and the federal exemptions and you choose the federal exemptions, then you may not use the federal nonbankruptcy exemptions.

Also, even if you use your state exemption system, you must still satisfy the specialized eligibility requirements under each nonbankruptcy exemption you wish to use.

What Assets Are Exempt Under The Federal Nonbankruptcy Exemptions?

Below are some of the most important federal nonbankruptcy exemptions. Unless specified in the exemption, there is no dollar limit to how much you can exempt.

Retirement Benefits

Your retirement benefits are fully exempt if you are one of the following:

• Civil, foreign, or military service employee.
• Railroad worker.
• CIA employee.
• Veteran.
• Military Medal of Honor Roll.
• Social Security benefit recipient.

Death and Disability Benefits

Your death and disability benefits are fully exempt if you are a longshoreman, harbor worker, or government employee. Also, if you have received benefits for risk, hazard, injury, or death resulting from war, that compensation is exempt.

Survivor's Benefits

Survivor's benefits are also fully exempt for lighthouse workers, certain judicial employees (judges, center directors, and Supreme Court Chief Justice administrative assistants), and military personnel.

Miscellaneous Nonbankruptcy Exemptions

• Military group life insurance.
• Deposits to savings accounts by military while on permanent duty outside the U.S.
• 75% of earned but unpaid wages or 30 times the federal minimum hourly wage, whichever is greater. (Judges have the discretion to grant more, usually for low-income debtors)
• Indian lands and homestead sale or lease proceeds.
• Klamath Indian benefits for Indians living in Oregon.
• Railroad worker unemployment benefits.
• Seamen's clothing.
• Debts incurred by a seaman while on a voyage.
• Wages of a seaman except if used for spousal or child support.

Complete List of Federal Nonbankruptcy Exemptions

Here's our list of federal nonbankruptcy exemptions that we last updated on April 21, 2022. Because bankruptcy exemptions change and this list could be incomplete, check with a bankruptcy lawyer to ensure you're properly exempting all of your assets.

Retirement, Disability, Death, and Survivor Benefits

• Government employees' death and disability benefits (5 USC 8130.)
• Civil service workers' retirement (5 USC 8346(a).)
• Military survivor annuities (10 USC 1450(i).)
• Benefits, annuities, and payments to Foreign Service employee survivors (22 USC 4060.)
• Judges, U.S. court & judicial center directors, administrative assistants to U.S. Supreme Court Chief Justice (28 USC 376(n).)
• ERISA-qualified benefits (29 USC 1056(d).)
• Longshoremen & harbor workers (33 USC § 775; 916.)
• Military Medal of Honor roll pensions (38 USC 1562(c).)
• Veterans' benefits (38 USC 5301(a).)
• Social Security benefits (42 USC 407.)
• War risk, hazard, death, or injury compensation (42 USC § 1701-1717.)
• Public safety officers (42 USC 3796.)
• Railroad workers (45 USC 231m.)
• CIA employees (50 USC 403.)

Other Federal Nonbankruptcy Benefits

• Crop insurance proceeds (7 USC 1509.)
• Military deposits in accounts while on active duty outside the U.S. (10 USC 1035(d).)
• Service member annuities (10 USC 1440.)
• Property recovered by trustee's avoidance (11 USC 522(g).)
• Tenancy by the entirety protection available in some jurisdictions (11 USC 522(b)(3)(B).)
• IRS tax-exempt retirement accounts, including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined-benefit plans; traditional and Roth IRAs to $1,512,350 (for bankruptcy cases filed between April 1, 2022, and March 31, 2025) (11 USC 522(b)(3)(C); (n).)
• COVID-19 recovery rebates (stimulus payments) (11 USC 541(b)(11).)
• Earnings – a minimum of 75% of disposable weekly earnings or 30 times the federal minimum hourly wage, whichever is more. A bankruptcy judge can authorize more for low-income debtors. (15 USC 1673.)
• Student loan, grant, or work assistance proceeds (20 USC 1095a(d).)
• Sales or lease proceeds of native lands held in trust (25 USC § 410, 412a.)
• General Accounting Office annuities (31 USC 776.)
• Group life insurance and war compensation for veterans (38 USC § 3101(a), 1970(g); 42 § 1717.)
• Railroad workers' unemployment insurance (45 USC 352(e).)
• Seamen's wages (except for spousal and child support) (46 USC 11109(a).)
• Seamen's clothing (46 USC 11110.)
• FEMA benefits exempt from garnishment (44 CFR 206.110(g).)

Learn about the bankruptcy exemptions available in your state.