The 1,215-Day Federal Homestead Exemption Cap in Bankruptcy

Under 11 U.S.C. § 522(p), the 1,215-day federal homestead exemption cap in bankruptcy limits the equity you can protect in a home you bought within roughly the last 40 months to $214,000, no matter how generous your state’s homestead exemption is.¹ Congress added the rule in 2005 to stop debtors from moving cash into real estate right before filing and shielding it from creditors. The current $214,000 figure took effect on April 1, 2025.

How the 1,215-Day Clock Is Measured

The clock starts on the date you acquired an ownership interest in the home and runs forward to the day you file your bankruptcy petition. If fewer than 1,215 days separate those two dates, you are inside the window and the cap applies to equity you personally put into the property during that period.¹

“Acquired an interest” means the legal moment you gained ownership. For most buyers, that is the closing date when the deed transferred. The bankruptcy trustee will pin down the exact date using closing documents, title records, and county recordings. File one day short of 1,215 days after purchase and you are inside the window.

Someone who has owned the same house for five years is not subject to this cap at all. Someone who bought a home 30 months ago and put $300,000 of savings into the down payment is precisely the scenario Congress had in mind.

What the $214,000 Cap Covers

If you fall inside the window, you cannot exempt more than $214,000 in equity acquired during that period. The cap applies per debtor, not per household. Spouses who file a joint petition can each exempt up to $214,000, for a combined ceiling of $428,000, because the statute says exemption rules “shall apply separately with respect to each debtor in a joint case.”¹

Any equity above your allowed exemption is available for the trustee to recover for creditors. Put $350,000 down on a house 18 months before filing, and only $214,000 of that equity is protected. The remaining $136,000 is exposed.

Which Equity Counts Toward the Cap

The cap applies to equity you actively put into the home during the lookback period, not to the home’s total value. That includes your down payment, mortgage principal you paid off, and cash you spent on improvements. Spend $80,000 renovating a kitchen with cash, and that value counts toward the $214,000 limit.¹

Market appreciation is generally treated differently. If your home gained $100,000 in value because the local market went up, courts have generally not treated that passive gain as “interest acquired by the debtor.” You did not acquire that equity through any affirmative act. To make the argument, debtors typically need a professional appraisal and detailed mortgage payment records that separate what they contributed from what the market added.

The distinction matters. Someone who bought a modest home for $200,000 with a $50,000 down payment, then watched it appreciate to $400,000, is in a different position than someone who bought a $400,000 home with $250,000 down. Both have $200,000 in equity, but the first person actively acquired only $50,000 plus principal paid on the mortgage.

The Same-State Rollover Exception

The cap does not penalize you for simply trading one home for another within the same state. Under § 522(p)(2)(B), equity transferred from a previous primary residence into a new one is excluded from the cap, as long as both homes are in the same state and you owned the previous home before the 1,215-day window began.¹

If you owned a home for ten years, sold it, and used the proceeds to buy a new house in the same state a year before filing, that rolled-over equity keeps its exempt status. The law treats it as a continuation of your existing equity rather than a new acquisition. The prior home must have been your principal residence. Equity from a vacation home or rental property does not qualify.

Crossing state lines kills this protection. Sell in one state and buy in another and the 1,215-day clock starts fresh on the new purchase date. The out-of-state home is treated as a brand-new interest, so the $214,000 cap applies to every dollar of equity brought into the new property. Congress designed this rule specifically to stop people from relocating to states with unlimited homestead exemptions right before filing.

The 730-Day Residency Trap

A second restriction catches many recent movers off guard. Under § 522(b)(3)(A), you can only use a state’s homestead exemption if you have been domiciled in that state for the 730 days (two years) immediately before your filing date.¹ Move states less than two years before filing and you cannot use the new state’s exemption laws at all. You are stuck with the exemptions from the state where you lived for the 180-day period immediately before that 730-day window.

The two rules stack. You lose the rollover exception because you crossed state lines, so the $214,000 cap applies. And you may not get to use the homestead exemption in your new state either, because you have not lived there long enough. Anyone who has recently relocated should map both timelines before filing.

How the Cap Overrides State Homestead Laws

Several states offer homestead exemptions far above $214,000, and a few provide unlimited protection. Under state law alone, you could theoretically keep a multimillion-dollar home free from creditors. The federal cap overrides those state protections for anyone who bought inside the lookback window.

This holds even in states that have “opted out” of the federal exemption system in § 522(d). The statute expressly makes state exemptions “subject to” the § 522(p) cap.¹ Federal bankruptcy law controls here.

If you have owned your home longer than 1,215 days and have not committed fraud or the offenses discussed below, the federal cap has no effect on you at all. Your state’s homestead exemption controls entirely.

The Family Farmer Carveout

Family farmers are exempt from the cap. If you qualify as a family farmer and the property is your principal residence, the $214,000 ceiling does not apply.¹ A qualifying farmer who recently purchased a homestead can use the full state exemption without the federal restriction.

Other Federal Provisions That Can Cap Your Equity

Even outside the 1,215-day window, two other rules can reduce or cap your homestead exemption.

Section 522(o) covers fraudulent conversion. If you moved nonexempt assets into home equity during the ten years before filing with the intent to hinder, delay, or defraud creditors, the court can reduce your exemption by the converted amount.¹ Selling stocks to pay down your mortgage months before filing is the classic example. The lookback here is ten years.

Section 522(q) caps the homestead exemption at $214,000 regardless of when you acquired the property if you were convicted of a felony demonstrating that your bankruptcy filing was an abuse of the system, or if you owe debts from securities law violations, certain fraud, or criminal acts that caused serious physical injury or death within the preceding five years.¹ This cap turns on conduct, not purchase date. A narrow safety valve applies to the extent the equity is “reasonably necessary for the support of the debtor and any dependent.”

What Happens When Your Equity Exceeds the Cap

The consequences depend on the chapter you file under.

In Chapter 7, the trustee has authority to sell the home. After paying the mortgage, other liens, taxes, and sale expenses, the trustee sets aside your exempt amount (up to $214,000 of recently acquired equity, plus any additional amount your state allows for equity acquired before the lookback window). The trustee takes a commission, and the remainder goes to creditors. Trustees generally will not pursue a sale unless the nonexempt equity is large enough to produce a meaningful payout after costs.

In Chapter 13, you keep the home. Instead of a sale, you must pay the nonexempt equity amount to unsecured creditors through a repayment plan over three to five years. With $50,000 in nonexempt equity, your plan must distribute at least that much on top of whatever else the plan requires. You can deduct estimated sale costs and trustee fees when calculating that figure.

For debtors with significant nonexempt equity who want to keep the house, Chapter 13 is often the better path. The higher plan payments can be difficult to sustain over several years, and failing to complete the plan means losing the protection.

1
Office of the Law Revision Counsel. 11 USC 522 – Exemptions