The Homestead Exemption in Bankruptcy
Whether you can protect your home is a big question for many people considering bankruptcy. Many states allow bankruptcy filers to protect some or all of the equity in their home in Chapter 7 bankruptcy. This protection is called the homestead exemption. The homestead exemption comes into play in Chapter 13 bankruptcy too.
Homestead exemptions vary widely by state. For example:
- A few states allow you to exempt all of your home equity, no matter how large. Others protect only a small amount of equity.
- Some states allow married couples filing joint bankruptcy to double the homestead exemption amount. Others do not.
- Some states require you to file a homestead declaration in order to take advantage of the homestead exemption in bankruptcy.
- Most states require you to use the state homestead exemption amount. A few allow you to choose between your state and the federal homestead exemption.
To learn about the homestead exemption in your state, start with our overview articles and then read the article about your state in particular. Each state article has information about the state's homestead exemption amount, what types of property it applies to, whether married filers can double the exemption, where you can find the state's homestead exemption laws (so you can go right to the source if necessary), and more.
Homestead Exemptions by State
How the Homestead Exemption Works in Bankruptcy
How the Homestead Exemption Works in Bankruptcy
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The Homestead Exemption in Bankruptcy
Learn how much home equity you can protect using the homestead exemption in bankruptcy and other requirements you must meet to keep a home in bankruptcy. All bankruptcy filers can keep a house if the homestead exemption protects all home equity. The Chapter 7 bankruptcy trustee will sell the home if the homestead exemption doesn't fully protect the home's equity. Chapter 13 filers can keep a home that isn't fully covered by the homestead exemption if they can afford to pay creditors the uncovered amount through the bankruptcy plan.