The Wildcard Exemption in Bankruptcy

Federal law and some states offer a "wildcard" exemption in bankruptcy that can protect any property you choose from creditors.

By , Attorney ● University of the Pacific McGeorge School of Law
Updated 9/16/2022

When you file for bankruptcy, you're allowed to use bankruptcy exemptions to protect property you'll need to work and maintain a home, such as a modest car, household belongings, clothing, and a small number of tools for your business or profession.

A wildcard exemption comes in handy because it allows you to save property you wouldn't ordinarily be able to protect. For instance, you might use it on sentimental yet valuable property, such as your grandmother's player piano or your childhood collection of baseball cards.

In this article, you'll learn:

  • how exemptions work to protect property in bankruptcy
  • how you can use the wildcard exemption to protect property, and
  • how to find out if a wildcard exemption is available to you.

Keep in mind that each state has a set of state exemptions, but your state might allow you to choose the federal bankruptcy exemptions instead. Reviewing our exemptions by state chart will help you figure out your options.

How Bankruptcy Exemptions Work

Most exemptions protect particular property. For example, if your state has a motor vehicle exemption, you'll be able to use the exemption amount to protect your car or another motor vehicle, but not another asset type. For instance, you couldn't use your leftover motor vehicle exemption to exempt money in your bank account.

To give you an idea about the property types you'll likely be able to protect, we've listed a few of the federal bankruptcy exemptions. Just remember that not all filers can use federal exemptions. You'll need to check your state exemption laws to determine your exemption options. (These exemption amounts are valid from April 1, 2022, through March 31, 2025.)

  • $27,900 of equity in a residence (11 U.S.C. § 522(d)(1))
  • $4,450 in a car or motorcycle (11 U.S.C. § 522(d)(2))
  • $14,875 total in household goods (furnishings, appliances, bedding, clothing, garden tools, and the like) with a cap of $700 per item (11 U.S.C. § 522(d)(3)), and
  • $2,800 for tools that you need in your business or profession. (11 U.S.C. § 522(d)(6).)

You'll use the same exemptions for Chapters 7 or 13, but what happens to property you can't exempt with a bankruptcy exemption depends on the bankruptcy chapter you file.

  • Chapter 7 bankruptcy. You'll relinquish the property to the Chapter 7 bankruptcy trustee, the person responsible for overseeing your case. The trustee will sell the property and distribute the funds to your creditors.
  • Chapter 13 bankruptcy. You can keep all of your property in Chapter 13, but you must pay your creditors the value of your nonexempt property. However, you don't have to come up with the money all at once. You'll pay it in the three- to five-year Chapter 13 repayment plan.

Find out more about keeping property in bankruptcy using exemptions.

A Wildcard Exemption Lets You Choose the Property You Protect

A true wildcard exemption isn't limited to a specific property type. You can use it to exempt any property of your choosing. For instance, you'll decide whether to use it on your car, money in the bank, expensive artwork, or any other asset you own. You can also split it between multiple assets, or combine it with other exemptions.

Example. Your state has a $3,000 motor vehicle exemption and a $5,000 wildcard exemption. If you own two cars worth $8,000, you can use the motor vehicle exemption to exempt $3,000 of one car and the wildcard exemption to exempt the remaining $5,000 in equity. Without the wildcard, the Chapter 7 trustee would likely sell both vehicles, pay you the $3,000 exemption amount, and use the balance to pay creditors. In a Chapter 13 case, you would have to pay for the nonexempt portion of your repayment plan.

How Much Is the Wildcard Exemption?

Not all states have wildcard exemptions, but the value will vary for those who do. You'll also find a wildcard in the federal bankruptcy exemptions.

  • Federal wildcard exemption. As of April 1, 2022, the federal wildcard exemption is $1,475 plus up to $13,950 of any unused portion of the federal homestead exemption. (If you're married and filing a joint bankruptcy, you can double these amounts.) Residents of Alaska, Arkansas, Connecticut, Hawaii, Kentucky, Massachusetts, Michigan, Minnesota, New Hampshire, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Texas, Vermont, Washington, Wisconsin, and the District of Columbia can use the federal bankruptcy exemptions instead of your state exemptions. Residents of other states cannot.
  • State wildcard exemptions. You'll need to check your state exemption statutes to determine whether your state has a wildcard exemption and if it does, how much you can protect. Also, some states' wildcard exemptions have limitations. For instance, your state might not let you use the wildcard exemption to protect cash or real estate. Or, your state's wildcard exemption might not be called a "wildcard" exemption. For instance, some states let filers apply an unused portion of a homestead exemption to any property of their choosing.

One of the most costly bankruptcy mistakes you can make is not understanding what will happen to your property. If you aren't sure, you should consult with a bankruptcy lawyer.

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 explaining 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.

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