Exempt Assets in Bankruptcy: Wildcard, Homestead, and Limits

Exempt assets in bankruptcy are the categories of property that a trustee cannot sell and creditors cannot reach when you file. Federal law and every state’s code list them out, capped at set dollar amounts for most items and unlimited for a few. Under the federal list, you can currently protect up to $31,575 of equity in your home, $5,025 in a vehicle, most retirement savings, professionally prescribed health aids, and more. The specific list available to you depends on where you’ve lived for the last two years and whether your state has opted out of the federal system.

Federal List, State List, or Both

The federal exemption framework sits in 11 U.S.C. § 522, which gives individual debtors the right to pull certain property out of the bankruptcy estate.¹ Every state also has its own list, and the statute lets each state opt out of the federal system. Roughly two-thirds have done so, meaning residents of those states must use the state list only. In the rest, you choose whichever list shelters more of your property. You cannot pick items from both.

Which state’s exemptions you’re allowed to use is a separate question. Under the 730-day rule, you must have been domiciled in one state for the full two years before filing to use that state’s list. If you moved during that window, the court looks back to whichever state you lived in for the majority of the 180 days before the two-year period.² The rule exists to stop last-minute moves to states with more generous protections.

Current Federal Dollar Limits

Federal exemption amounts adjust every three years. The figures below apply to cases filed between April 1, 2025, and March 31, 2028.¹

Homestead: up to $31,575 in equity in your primary residence. Investment and vacation properties don’t qualify.
Motor vehicle: up to $5,025 in one car or truck.
Jewelry: up to $2,125 in jewelry held for personal or family use.
Household goods: clothing, furniture, and appliances for personal or family use, with per-item and aggregate caps.
Tools of the trade: equipment, books, and tools used in your profession.
Health aids: professionally prescribed devices, with no dollar cap.
Life insurance: an unmatured policy you own, excluding credit life insurance.

State lists can look very different. A few states offer unlimited homestead protection, letting you shield a home worth well over a million dollars. Others cap it far below the federal figure. If your state gives you the choice, compare both lists carefully before filing.

The Wildcard

The federal wildcard is the most flexible exemption because it applies to any property at all. The base amount is $1,675, usable on cash, a pending tax refund, or anything that doesn’t fit a named category.¹ If you don’t use the full homestead exemption, you can roll up to $15,800 of the unused portion into the wildcard. A renter with no homestead claim could therefore shield as much as $17,475 in otherwise unprotected property.

This makes the wildcard especially valuable for people who don’t own a home. It can cover vehicle equity above the vehicle cap, protect a savings account, or shield a small inheritance. Not every state offers a wildcard, and those that do set their own limits, so this stacking option is only available if you use the federal list.

Retirement Accounts

Retirement savings get some of the strongest protection in bankruptcy. Accounts that qualify for tax-exempt status under the Internal Revenue Code, including 401(k) plans, 403(b) plans, pensions, and profit-sharing plans, are exempt regardless of the balance.² These employer-sponsored plans generally have ERISA protections layered on top.

Traditional and Roth IRAs are treated differently. They’re exempt only up to a combined cap, currently $1,711,975 as of the April 2025 adjustment.¹ Money rolled over from a 401(k) into an IRA doesn’t count against that cap. SEP-IRAs and SIMPLE IRAs also fall outside the cap and get the same unlimited protection as employer plans.

Government Benefits and 529 Plans

Social Security payments carry their own federal shield separate from the bankruptcy exemption list. Under 42 U.S.C. § 407, benefits cannot be reached through garnishment, levy, attachment, or bankruptcy.³ Veterans’ benefits, unemployment compensation, disability payments, and public assistance receive similar protection under the federal exemption statute.

529 education savings funds are also sheltered, but with conditions. Contributions made more than 365 days before filing are generally excluded from the estate as long as the beneficiary is your child, stepchild, grandchild, or stepgrandchild. Contributions made between 365 and 720 days before filing are capped at $8,575 per beneficiary.⁴ Anything deposited within the final year before filing gets no protection at all. Health Savings Accounts have no dedicated federal exemption, so HSA funds have to ride on the wildcard or a state-level provision if one exists.

What Is Not Protected

Knowing the exempt categories matters less if you don’t also know what falls outside them. Property that generally is not protected includes second homes and vacation properties, additional vehicles beyond the one covered by your exemption, valuable collections such as coins or art, stocks and brokerage accounts held outside retirement plans, cash beyond wildcard coverage, and luxury items past what would count as basic household goods. Equity in your primary home that exceeds the exemption cap is also exposed.

This is where filers get surprised. Assuming everything is protected, filing Chapter 7, and then watching the trustee sell a boat or empty a brokerage account is a common story. If you have substantial non-exempt assets, Chapter 13 often makes more strategic sense because it lets you keep the property in exchange for higher plan payments.

How Exemptions Play Out in Chapter 7 and Chapter 13

Chapter 7

In Chapter 7, the line between exempt and non-exempt is hard. The trustee takes control of everything you own that isn’t exempt, sells it, and distributes the proceeds to creditors. Exempt property stays with you. After the trustee liquidates what’s available, most remaining qualifying debts are discharged. Filers with few non-exempt assets often lose nothing and finish debt-free.

Chapter 13

Chapter 13 works differently. You keep all of your property, including non-exempt assets, but you pay into a court-supervised plan lasting three to five years.5 The value of your non-exempt assets still matters because it sets the floor on what unsecured creditors must receive over the plan’s life. This is the liquidation test: unsecured creditors must be paid at least what they would have received had your non-exempt property been sold in a Chapter 7 case. If you hold $10,000 in non-exempt assets, the plan must deliver at least $10,000 to unsecured creditors over its duration.

Joint Filings for Married Couples

When a married couple files jointly, federal exemptions apply separately to each spouse, which effectively doubles every dollar amount. A couple using the federal list can protect up to $63,150 in combined home equity, $10,050 across two vehicles, and $3,350 in combined wildcard base.² Not every state allows doubling under its own list, so the federal option can be a meaningful advantage for married filers in states that permit a choice.

Pre-Filing Conversion and Homestead Lookback

Turning non-exempt property into exempt property before filing is not automatically illegal, but the line is easy to cross. Selling a stock portfolio to pay down a mortgage moves wealth from an unprotected category into your homestead exemption. Courts tolerate modest, good-faith planning. Large-scale, last-minute moves designed to place assets beyond creditors are another matter.

The trustee can claw back fraudulent transfers made within two years before you filed.⁶ If your state has adopted the Uniform Voidable Transactions Act, that window can reach four years. Courts look at whether you acted with intent to hinder or defraud creditors, or whether you transferred property for less than its worth while already insolvent. Red flags include paying off a family member’s debt while ignoring your own creditors, transferring property to a relative for a token amount, and moving a large sum into an exempt asset shortly before filing.

For homestead claims specifically, if you acquired your home within 1,215 days (about three years and four months) before filing, a separate federal cap limits how much equity you can exempt regardless of what your state allows.¹ Moving to a state with unlimited homestead protection and buying an expensive house right before filing is the scenario this rule targets.

How to Claim Exemptions

Exemptions do not apply automatically. You have to claim them by filing Schedule C (Form 106C) with your bankruptcy petition.⁷ For each item, you list a description of the property, its current fair market value, and the specific statute that provides the exemption. Fair market value is what a buyer would pay for the item in its current condition, not what you paid or what a replacement costs. Listing property at an unrealistically low value can trigger trustee scrutiny, and the asset can lose its protection.

Once you file, the trustee and every listed creditor gets notice. Any party who thinks an exemption was improperly claimed has 30 days after the conclusion of the 341 meeting of creditors (or 30 days after you file an amendment, whichever is later) to object.⁸ If nobody objects in that window, the exemptions become final. The deadline is strict.

When an objection is sustained, the court can strip the exemption and order you to turn the asset over for liquidation. If you’re unsure whether something qualifies, claim it and let the trustee raise the issue. Property you don’t list and don’t claim is essentially handed to the trustee with no fight at all.

Amending Schedule C

You can amend Schedule C at any time before your case is closed.⁹ If you forgot an asset, undervalued something, or cited the wrong statute, an amendment fixes the record. You must notify the trustee and any affected creditor. Filing an amendment restarts the 30-day objection clock for the amended items, giving creditors a fresh chance to challenge. Amending promptly beats hoping nobody notices. Trustees find missing assets regularly, and the consequences of appearing to hide property are far worse than the inconvenience of filing a correction.

1
Office of the Law Revision Counsel. 11 USC 522 – Exemptions
2
Office of the Law Revision Counsel. 11 US Code 522 – Exemptions
3
Office of the Law Revision Counsel. 42 US Code 407 – Assignment of Benefits
4
Office of the Law Revision Counsel. 11 USC 541 – Property of the Estate>
5
United States Courts. Chapter 13 – Bankruptcy Basics
6
Office of the Law Revision Counsel. 11 USC 548 – Fraudulent Transfers and Obligations
7
United States Courts. Schedule C: The Property You Claim as Exempt
8
Cornell Law Institute. Federal Rules of Bankruptcy Procedure Rule 4003 – Exemptions
9
Legal Information Institute. Federal Rules of Bankruptcy Procedure Rule 1009 – Amending a Voluntary Petition, List, Schedule, or Statement