Bankruptcy exemptions under 11 U.S.C. 522 let you keep specific property when you file, shielding it from the trustee and your unsecured creditors up to set dollar limits. The federal system covers your home, one vehicle, retirement accounts, household goods, tools of your trade, public benefits, and a flexible wildcard. Effective April 1, 2025, the federal homestead exemption is $31,575, the vehicle exemption is $5,025, and nearly every other threshold was adjusted; those figures hold through March 31, 2028.1Federal Register. Adjustment of Certain Dollar Amounts Applicable to Bankruptcy Cases Whether those numbers actually apply to you depends on your state, because roughly 35 states force residents to use the state system instead.
Why Exemptions Matter Differently in Chapter 7 and Chapter 13
In Chapter 7, the trustee can sell any property that isn’t exempt and distribute the proceeds to creditors. Anything you successfully exempt stays with you. That is why exemption planning is so concrete here: what isn’t exempt gets liquidated.
In Chapter 13, you keep your property regardless of exemptions and repay creditors through a three-to-five-year plan. Exemptions still matter because the total value of your non-exempt property sets a floor for how much the plan must pay unsecured creditors. More exempt property means lower monthly payments.
Federal Exemption Amounts
If your state permits use of the federal exemptions, these are the current limits under Section 522(d), as adjusted April 1, 2025.2Office of the Law Revision Counsel. 11 USC 522 – Exemptions1Federal Register. Adjustment of Certain Dollar Amounts Applicable to Bankruptcy Cases
Homestead
You can exempt up to $31,575 in equity in your primary residence, a housing cooperative, or a burial plot. This covers only the home where you actually live. Vacation properties, rentals, and investment real estate get no homestead protection. Joint filers each claim the exemption, so a married couple can protect up to $63,150 in equity.
The federal amount can feel small in expensive markets, which is one reason the choice between federal and state systems matters so much.
Vehicle, Household Goods, and the Wildcard
- Motor vehicle: up to $5,025 in equity in one vehicle.
- Household goods and furnishings: up to $800 per item and $16,850 total across clothing, appliances, books, and similar belongings for personal or family use.
- Jewelry: up to $2,125 in items held for personal or family use.
- Tools of the trade: up to $3,175 in work tools, professional books, or equipment.
- Health aids: professionally prescribed health aids, fully exempt with no dollar cap.
- Life insurance: an unmatured policy is fully exempt, and up to $16,850 in accrued cash value or loan value is protected.
The wildcard is one of the most flexible tools in the federal system. You can apply $1,675 to any property at all, plus up to $15,800 of any homestead amount you didn’t use. A renter with no home equity can effectively convert the full unused homestead into wildcard protection for a bank account, an over-limit car, or anything else of value.
Retirement Accounts
Tax-qualified retirement accounts get some of the strongest protection in bankruptcy. 401(k)s, 403(b)s, 457 plans, and pension plans covered under ERISA are exempt without a dollar cap, regardless of whether you claim federal or state exemptions.
Traditional and Roth IRAs are the exception. These are capped at $1,711,975 per person as of April 2025, though a court can raise the amount if the interests of justice require it. Rollovers from employer plans into an IRA don’t count against the cap, and SEP and SIMPLE IRAs are treated as employer plans, so they escape the cap too.
Two traps to know. Inherited IRAs are not protected: the Supreme Court held unanimously in Clark v. Rameker (2014) that inherited IRAs aren’t “retirement funds” for exemption purposes.3Justia. Clark v Rameker And funds withdrawn from a retirement account before filing lose the exemption the moment they sit in a regular bank account.
Public Benefits and Support Payments
The right to receive Social Security, veterans’ benefits, unemployment compensation, disability payments, and public assistance is exempt. Social Security receives additional protection under the Social Security Act, which bars those funds from bankruptcy or insolvency proceedings.4Social Security Administration. SSR 79-4
Alimony, child support, and separate maintenance you receive are exempt only to the extent reasonably necessary to support you and your dependents. Unusually large payments could be partially exposed under that standard.
Federal Exemptions or State Exemptions?
Section 522(b) lets each state prevent its residents from using federal exemptions. Roughly 35 states have opted out, meaning the federal dollar figures above do not apply to their filers at all. The remaining states let you choose between the federal system and the state system. You must pick one set; you cannot combine protections from both lists.
State systems vary widely. Some offer homestead protection reaching hundreds of thousands of dollars or even unlimited amounts. Others protect specific categories like farm equipment, livestock, firearms, or annuities more generously than federal law. Wage protection also differs.
Where you have a choice, the right pick depends on what you own. A homeowner with substantial equity usually wants whichever system has the larger homestead exemption. A renter often prefers the federal wildcard.
Which State’s Exemptions You Actually Use
You don’t automatically get the exemptions of the state where you live now. Section 522(b)(3)(A) requires you to use the exemptions of the state where you were domiciled for the 730 days before filing. If you moved during that period, you use the exemptions of the state where you lived for the majority of the 180 days immediately before that 730-day window opens.
The rule exists to stop people from relocating to a favorable state right before filing. If the domicile calculation leaves you ineligible for any state’s exemptions, you can fall back on the federal system. Anyone who has moved recently should work through the timeline before filing.
Joint Filers
Section 522(m) provides that exemptions “shall apply separately with respect to each debtor in a joint case.” Married couples filing together can each claim the full set, effectively doubling protection on jointly owned property: up to $63,150 in homestead equity, $10,050 across two vehicles, and so on.
Filing jointly is not always right. If one spouse carries most of the debt and the other holds most of the assets, filing separately can keep the non-debtor spouse’s property out of the estate entirely.
Limits Built Into the Homestead Exemption
Section 522 has two anti-abuse rules that override state homestead amounts.
The first is a cap for recent purchasers. If you acquired your home within 1,215 days (about three years and four months) before filing, your homestead exemption is capped at $214,000 regardless of what state law would otherwise allow. This figure was adjusted effective April 1, 2025, and holds until April 1, 2028.
The second is a fraud reduction. If you sold non-exempt property within the 10 years before filing and used the proceeds to build up home equity with the intent to put assets beyond creditors’ reach, the court can reduce your homestead exemption by the amount traceable to those transfers. The 10-year lookback is long, and trustees investigate it aggressively.
Stripping Liens That Impair Exemptions
An exemption is worth less if a lien absorbs the equity. Section 522(f) lets you avoid two kinds of liens that impair exempt property:
- Judicial liens from a court judgment against you, with an exception for domestic support obligations like child support and alimony.
- Non-purchase-money security interests in household goods, clothing, appliances, tools of the trade, or health aids. This commonly reaches finance-company loans secured by furniture or electronics you already owned when you borrowed.
The test is arithmetic: if the sum of all liens plus your exemption exceeds the property’s value, the judicial lien impairs the exemption and can be stripped to the extent of the impairment. Without this motion, a judgment lien can follow property right through the discharge.
Debts That Reach Exempt Property Anyway
Exemptions shield property from the trustee and general unsecured creditors. They do not shield it from every debt. Section 522(c) allows several categories of debt to reach exempt property:
- Domestic support obligations, including child support and alimony. The statute overrides state law to the contrary.
- Properly filed tax liens.
- Debts from fraud against a federal depository institution and debts arising from fraudulently obtained educational financial assistance.
- Secured debts whose liens were not avoided under Section 522(f). A mortgage or car loan remains attached to the property; the exemption protects equity, not the asset itself.
Exempting your home does not cancel the mortgage. Exempting a bank account does not stop a child support garnishment.
Property You Acquire Within 180 Days After Filing
Your bankruptcy estate does not always freeze on the filing date. Under 11 U.S.C. 541(a)(5), certain property you become entitled to within 180 days after filing is pulled into the estate:5Office of the Law Revision Counsel. 11 US Code 541 – Property of the Estate
- Inheritances. The trigger is the date of the decedent’s death, not when you receive the funds.
- Life insurance proceeds you become entitled to within the window.
- Property received through a divorce decree or settlement agreement.
After 180 days, new property you acquire generally stays outside the estate. If you know an inheritance or insurance payout is likely, filing timing matters.
Claiming Exemptions on Schedule C
Exemptions are not automatic. You must list every asset you want to protect on Schedule C of your petition and cite the specific exemption statute and dollar amount for each.6Legal Information Institute. Federal Rules of Bankruptcy Procedure Rule 4003 – Exemptions Missing an asset or citing the wrong provision can cost you property you were entitled to keep.
Creditors and the trustee have a limited window to object. Under Rule 4003, objections must be filed within 30 days after the later of the conclusion of the meeting of creditors, the filing of an amendment, or the filing of a supplemental schedule. If no one objects within that window, the exemption stands even if it was technically improper. The burden of proof falls on the party raising the objection.
You can amend Schedule C after filing to add or correct exemptions. Rule 1009 allows amendments freely as long as creditors are not prejudiced. An amendment restarts the 30-day objection period for the newly claimed exemption. If you realize you left an asset off, amending promptly is almost always better than hoping no one notices.