Exempt Property in Bankruptcy: Federal Lists, Caps, and Liens

Exempt property in bankruptcy is the property the law lets you keep when you file. Under the federal exemption list, you can protect up to $31,575 in home equity, $5,025 in vehicle equity, retirement accounts (with an IRA cap of $1,711,975), and a wildcard worth up to $17,475 that you can apply to anything. These figures are in effect for cases filed from April 1, 2025 through March 31, 2028.¹ About two-thirds of states have opted out of the federal list, so whether those numbers are the ones you actually get depends on where you live.

Which Exemption List You Get to Use

The bankruptcy code offers two possible sets of exemptions: the federal list in 11 U.S.C. § 522(d), or your state’s own exemption statutes. Roughly 35 states have opted out of the federal list entirely. If you live in an opt-out state, you have no choice and must use state law. If your state hasn’t opted out, you pick the list that protects more of your property. You cannot mix categories between the two.²

Which state’s law applies turns on domicile. You use the exemption laws of the state where you’ve been domiciled for the 730 days (two years) before filing. If you moved during that window, you use the state where you lived for the majority of the 180 days before the two-year period began. The lookback keeps people from relocating to a generous state right before filing.²

One safety valve: if the domicile rule leaves you ineligible for any state’s exemptions, you can fall back on the federal list even in an opt-out state. This mostly matters when the applicable state requires current residency to claim its exemptions and you’ve already moved away.²

Federal Exemption Amounts in Effect Now

The bankruptcy code adjusts its dollar limits for inflation every three years. The current figures took effect April 1, 2025 and apply to every case filed through March 31, 2028.¹

Homestead: $31,575 in equity in your primary residence, a co-op unit you live in, or a burial plot.
Motor vehicle: $5,025 in equity in one car or truck.
Household goods: $800 per item and $16,850 total across furniture, clothing, appliances, books, and similar personal-use items.
Jewelry: $2,125 total in personal-use jewelry.
Wildcard: $1,675 in any property, plus up to $15,800 of any unused homestead exemption, for a potential total of $17,475.
Tools of the trade: $3,175 in equipment, books, or tools needed for your work.
Life insurance: any unmatured policy you own (excluding credit life insurance), plus up to $16,850 in cash value or accrued dividends.
Health aids: no dollar cap on professionally prescribed health aids for you or a dependent.
Personal injury awards: $31,575 for a bodily injury award, not counting pain and suffering or punitive damages, which fall under other categories.

Every figure above represents equity, not market value. Equity is what the asset is worth minus what you still owe on it. A car worth $12,000 with an $8,000 loan has $4,000 in equity, which sits well inside the $5,025 vehicle exemption.

The Wildcard Does More Work Than People Realize

The wildcard is the most flexible piece of the federal system. The base $1,675 can go on anything: cash, a checking account balance, a tax refund, or equity that spills past another category’s cap. The real power is the unused-homestead carryover. If you rent and claim no homestead exemption, you can redirect up to $15,800 of that unused amount into the wildcard, pushing it to $17,475. For non-homeowners, the wildcard is often worth more than the homestead itself.¹

Retirement Accounts and Public Benefits

Employer-sponsored retirement plans — 401(k)s, 403(b)s, profit-sharing plans — are fully protected with no dollar cap, under their ERISA anti-alienation provisions. Traditional and Roth IRAs are protected up to an aggregate limit of $1,711,975 across all your IRA accounts combined. SEP-IRAs and SIMPLE IRAs get unlimited protection like employer plans. A bankruptcy court can raise the IRA cap when circumstances warrant.¹

Social Security, veterans’ benefits, unemployment, disability payments, and public assistance are fully exempt under federal law with no cap. Child support and alimony you receive are exempt to the extent reasonably necessary for your support. Pension or profit-sharing payments based on illness, disability, or death get the same protection; payments based only on age or length of service are protected if reasonably necessary for support and the plan qualifies under the tax code.²

How Exemptions Work in Chapter 7 vs. Chapter 13

What exemptions actually do for you depends on which chapter you file.

In a Chapter 7 case, a trustee identifies and sells your non-exempt property and distributes the proceeds to creditors. Anything properly exempted stays out of reach. Non-exempt property typically means a second vehicle, vacation homes, valuable collections, investment accounts outside retirement plans, and cash or securities beyond your available exemptions. Most consumer Chapter 7 cases are “no-asset” cases, meaning exemptions cover everything the filer owns. When they don’t, the trustee sells the asset, pays you the exempt portion from the proceeds, and distributes the rest.

In Chapter 13, you keep everything you own because you’re repaying creditors through a three-to-five-year plan rather than liquidating. Exemptions still matter because of the best-interests-of-creditors test: your plan must pay unsecured creditors at least what they would have received in a Chapter 7.³ More non-exempt equity means a higher required payment over the life of the plan, even though you don’t lose the property itself.⁴

How to Claim an Exemption

Exemptions don’t apply by default. You claim them on Schedule C (Official Form 106C), filed with your petition.⁵ For each asset you list the property, its current market value, the exemption amount you’re claiming, and the specific statute authorizing it.⁶

Value means fair market value: what a willing buyer would pay a willing seller when neither is under pressure. For household goods, that’s resale-shop or secondhand pricing, not retail replacement cost. For vehicles, courts look at retail value in similar condition rather than trade-in value. Undervaluing an asset invites an objection from the trustee and can undermine your credibility across the rest of the case.

After filing, you’ll attend a meeting of creditors, often called the 341 meeting, where the trustee asks you questions under oath about your assets, debts, income, and the information in your petition. No judge is present. Creditors may attend but rarely do in consumer cases.⁷

The trustee and creditors then have 30 days after the 341 meeting concludes to object to any claimed exemption. If an objection is filed, you’ll need to defend your value or show the statute actually covers the property. If no one objects in that window, the exemption becomes final and the property is permanently out of the bankruptcy estate. The deadline is strict, and a missed objection generally leaves the exemption standing even if it was technically improper.⁸

Stripping Liens Off Exempt Property

Claiming an exemption shields your equity from the trustee, but it doesn’t automatically clear liens that attached before you filed. For certain liens, you can ask the court to remove them.

Under § 522(f), you can avoid a judicial lien (one from a lawsuit judgment) on exempt property to the extent it impairs your exemption. You can also avoid a nonpurchase-money security interest in household goods, tools of the trade, and professionally prescribed health aids. A nonpurchase-money security interest is one where a lender took your existing property as collateral for a loan that wasn’t used to buy that property, such as a finance company that lends you cash and takes a blanket lien on your furniture. Lien avoidance requires a separate motion and the creditor gets a chance to respond.²

The 1,215-Day Homestead Cap

If you acquired your home within the 1,215 days (roughly three years and four months) before filing, a federal cap applies no matter how generous your state’s homestead exemption is. For cases filed in 2026, that cap is $214,000, and it applies when you’re using state exemptions.¹ The rule exists to stop filers from pouring money into a new home in an unlimited-homestead state right before filing.

The cap applies only to the interest acquired during the 1,215-day window. Equity built through ordinary mortgage payments over years of ownership is generally not affected. Longtime homeowners aren’t the target.²

Joint Filing Doubles the Federal Amounts

When married spouses file a joint federal-exemption case, each spouse gets the full set. That means up to $63,150 in homestead equity, $10,050 in vehicle equity across two cars, and up to $34,950 in combined wildcard protection if neither spouse uses the homestead. The IRA cap of $1,711,975 also applies per person, so a couple can protect up to $3,423,950 in IRAs.¹

Whether state exemptions double depends on the state. Some allow it, some don’t, and some only let you double on jointly owned property. In a state that doesn’t permit doubling, filing jointly can leave a couple worse off than filing separately. That choice can swing the protected amount by tens of thousands of dollars.

Converting Non-Exempt Assets Before Filing

Shifting non-exempt assets into exempt categories before filing is a recognized planning move. Paying down a mortgage with cash, buying needed tools of your trade, or funding an IRA from non-exempt savings are all, in principle, legitimate. Courts have held that this kind of positioning, standing alone, doesn’t disqualify an exemption.

The line is crossed when conversions are extreme or clearly aimed at hiding assets. Liquidating nearly everything you own into a single unlimited exemption while facing a large judgment is the kind of behavior that leads to a denied discharge. Courts look for awareness of pending claims, a sudden flurry of transfers, and amounts beyond what a fresh start requires.

A statutory penalty backs this up. If you disposed of property within the ten years before filing with intent to defraud creditors, and that property could not have been exempted at the time, your homestead exemption is reduced by the value traceable to the fraudulent transfer. The ten-year lookback is long and the standard is intent-based, so aggressive maneuvering carries real risk even when an individual exemption otherwise qualifies.²

1
Federal Register. Adjustment of Certain Dollar Amounts Applicable to Bankruptcy Cases
2
Office of the Law Revision Counsel. 11 USC 522 – Exemptions
3
Office of the Law Revision Counsel. 11 USC 1325 – Confirmation of Plan
4
United States Courts. Chapter 13 – Bankruptcy Basics
5
United States Courts. Schedule C – The Property You Claim as Exempt
6
United States Courts. Official Form 106C – Schedule C – The Property You Claim as Exempt
7
United States Department of Justice. Section 341 Meeting of Creditors
8
Legal Information Institute. Federal Rules of Bankruptcy Procedure Rule 4003 – Exemptions