When you file bankruptcy, you can keep the property that falls within legal protections called exemptions: equity in your home up to a set dollar limit, a car up to a set limit, retirement accounts, household goods, tools you use for work, government benefits, and a flexible “wildcard” amount you can apply to anything else. What you can keep when filing for bankruptcy depends on which exemption list applies to you (federal or your state’s), how much equity you actually have in each asset, and, in a few situations, how long you have lived where you live now. The federal dollar amounts below reflect the adjustments effective April 1, 2025.
How Exemptions Decide What Stays Yours
The moment you file, nearly everything you own becomes part of a legal “bankruptcy estate” that a trustee controls.1Office of the Law Revision Counsel. 11 USC 541 – Property of the Estate Exemptions pull specific property back out of the estate up to a stated dollar amount.2Office of the Law Revision Counsel. 11 USC 522 – Exemptions If your equity in an asset fits inside the limit, you keep it. If it goes over, the trustee may sell the asset, hand you the exempt portion in cash, and use the rest to pay creditors.
p>Equity is the piece you actually own: current market value minus any loan balance or lien against the property. A $12,000 car with a $9,000 loan against it has $3,000 in equity, and that $3,000 is what an exemption has to cover.
Federal List or Your State’s List
Federal law offers a standard set of exemptions, but states can require residents to use the state’s list instead, and many do.2Office of the Law Revision Counsel. 11 USC 522 – Exemptions In states that give you a choice, you pick one list and use it in full. You cannot take the homestead exemption from one list and the vehicle exemption from the other.
The choice matters because the numbers can look very different. The federal homestead protects $31,575 in home equity; some states protect hundreds of thousands, and a handful offer unlimited homestead protection subject to acreage limits. States sometimes trade that generosity for weaker protection of vehicles or personal property, so the right list is the one that fits what you actually own.
Your Home
The homestead exemption covers equity in the place where you actually live, not a rental property, vacation home, or investment parcel. Under the federal list, an individual can protect up to $31,575 in home equity, and a married couple filing jointly can protect $63,150.2Office of the Law Revision Counsel. 11 USC 522 – Exemptions As long as your equity stays within the limit and you keep paying your mortgage, the house is yours.
State homestead protections vary from nothing to unlimited. One federal cap overrides state generosity, though: if you bought the home within 1,215 days before filing and you are using state exemptions, your homestead protection is capped at $214,000 no matter what the state allows.2Office of the Law Revision Counsel. 11 USC 522 – Exemptions
Your Car
The federal motor vehicle exemption protects up to $5,025 in equity in a car, truck, van, or motorcycle.2Office of the Law Revision Counsel. 11 USC 522 – Exemptions State limits run higher or lower.
Financed vehicles usually have little equity and sit comfortably inside the limit. A paid-off car worth $15,000 is different: only $5,025 of that equity is protected on the federal list, and the trustee could sell the vehicle, return $5,025 to you, and use the rest for creditors. A second car can sometimes be protected by stacking the wildcard on top of the vehicle exemption. Any financed vehicle also requires you to stay current with the lender; the loan itself does not go away with the bankruptcy.
Household Goods, Jewelry, and Tools of Your Trade
Everyday belongings held for personal or family use, including furniture, clothing, kitchen appliances, books, electronics, computers, children’s toys, and hobby equipment, are covered by a household goods exemption. The federal limits are $800 per individual item and $16,850 in total.2Office of the Law Revision Counsel. 11 USC 522 – Exemptions The per-item value is resale value, not what you originally paid, so most used household items come in well under the caps.
Jewelry has its own line. You can protect up to $2,125 in jewelry held for personal or family use.3Office of the Law Revision Counsel. 11 US Code 522 – Exemptions Wedding rings can also fit under the broader household goods category. If a ring, heirloom, or watch is worth more than $2,125, the wildcard can cover the difference.
If you need specialized equipment to earn a living, the tools-of-the-trade exemption protects up to $3,175 in implements, professional books, or similar items used by you or a dependent in your work.2Office of the Law Revision Counsel. 11 USC 522 – Exemptions The wildcard can be layered on top if your equipment is worth more.
Retirement Accounts
Retirement savings get some of the strongest protection in the whole system. ERISA-qualified plans, including 401(k)s, 403(b)s, pensions, and profit-sharing plans, are fully excluded from the bankruptcy estate with no dollar cap, so long as the money stays inside the qualified plan.2Office of the Law Revision Counsel. 11 USC 522 – Exemptions SEP IRAs and SIMPLE IRAs are treated the same way.
Traditional and Roth IRAs are protected up to a combined cap of $1,711,975.4Office of the Law Revision Counsel. 11 USC 522 – Exemptions Money rolled over from an employer plan into an IRA does not count against that cap, and a court can raise the limit if the interests of justice require.
Cash, Bank Balances, and Tax Refunds
Cash on hand, checking and savings balances, and pending tax refunds are all part of the estate, and no federal exemption is dedicated to cash. The wildcard fills that gap. Under the federal list, the wildcard protects $1,675 in any property, plus up to $15,800 of any unused homestead exemption, for a possible total of $17,475.2Office of the Law Revision Counsel. 11 USC 522 – Exemptions A renter with no home equity gets the full stack. Spouses filing jointly can each claim a wildcard.
Tax refunds are worth thinking about ahead of time. A refund based on income you earned before you filed is estate property, even if the check has not arrived yet. Some filers receive the refund and spend it on necessities before filing; others cover it with the wildcard or a state cash exemption. A refund based on income earned after the filing date belongs to you.
Government Benefits and Support Income
Federal law exempts Social Security, unemployment compensation, veterans’ benefits, disability payments, and local public assistance, and these protections apply regardless of amount.2Office of the Law Revision Counsel. 11 USC 522 – Exemptions Keeping benefit funds identifiable, rather than mixing them with other deposits, makes it easier to show what is protected.
Life Insurance and Personal Injury Awards
The cash value of a whole life or universal life policy you own is exempt up to $16,850 under the federal list.3Office of the Law Revision Counsel. 11 US Code 522 – Exemptions Term policies typically have no cash value and are not in play. The wildcard can cover any excess.
Personal injury awards get up to $31,575 in federal protection for compensation for bodily injury, not counting pain and suffering or reimbursement of actual financial loss.3Office of the Law Revision Counsel. 11 US Code 522 – Exemptions Wrongful death benefits, crime victim reparations, and certain loss-of-future-earnings payments have their own separate protections on the federal list.
If You Recently Moved to a New State
You need to have lived in your current state for at least 730 days (two years) before filing to use that state’s exemption list. If you have not, you use the exemptions of the state where you lived for most of the 180-day stretch just before that 730-day window. If that rule leaves you with no state exemptions you qualify for, you can fall back on the federal list.2Office of the Law Revision Counsel. 11 USC 522 – Exemptions If a move is recent or planned, timing the filing can change which numbers apply.
What Happens If Something Is Worth More Than the Exemption
Non-exempt equity does not guarantee you lose the asset. In a Chapter 7 case, the trustee sells property only when the sale would produce meaningful money for creditors after paying sale costs and your exempt share. Small amounts of excess equity often lead the trustee to abandon the asset back to you.
You can also offer to buy the non-exempt portion from the trustee, paying an amount equal to that excess in exchange for keeping the property. Trustees often accept because it saves them a sale. The funds usually have to come from outside the estate, such as a loan from a friend or family member.
Chapter 13 is the other route. You keep all your property and repay creditors through a three- to five-year plan, but the plan has to pay unsecured creditors at least what they would have received if your non-exempt assets had been liquidated under Chapter 7.5United States Courts. Chapter 13 – Bankruptcy Basics More non-exempt property means higher monthly plan payments, but it also means you keep the property while paying the equivalent value over time. For filers with significant home equity or valuable belongings, that trade-off is often the practical way to protect what the straight exemption limits will not.