What Property Is Exempt From Creditors? Home, Wages, Retirement

Under federal and state law, property exempt from creditors generally includes equity in your home up to a set cap, one vehicle up to a cap, most household furnishings and clothing, retirement accounts, a portion of your wages, and government benefits like Social Security. The dollar limits come from either the federal bankruptcy exemption list in 11 U.S.C. 522 or from your state’s own exemption statutes, and which set applies depends on where you live. The protections operate both inside bankruptcy and, in most cases, against a judgment creditor trying to collect outside of it.

Federal or State Exemptions

Federal bankruptcy law gives every debtor the right to exempt certain property from the bankruptcy estate, but each state decides whether its residents may use the federal list or must use the state’s list instead. About 35 states have opted out of the federal system. In the rest, you pick whichever set works better for your situation, and you cannot mix items from both.¹

Which state’s exemptions apply turns on residency. You use the exemptions of the state where you had your home for the 730 days before filing. If you moved during that window, you use the exemptions of the state where you lived for most of the 180 days before that two-year lookback began.¹

Home Equity

The homestead exemption shields equity in your primary residence. Under the federal system, you can protect up to $31,575 in home equity for cases filed between April 1, 2025, and March 31, 2028.² State homestead exemptions vary widely; some cap protection at modest amounts, and a few offer unlimited protection.

One federal limit applies even in generous states. If you bought your home within 1,215 days before filing (roughly three years and four months), your homestead exemption is capped at $214,000 of the equity you acquired during that period. The rule blocks debtors from pouring cash into a home in a high-exemption state right before filing.¹

Vehicles

The federal motor vehicle exemption covers up to $5,025 in equity in one vehicle.² Equity is the vehicle’s market value minus what you still owe. A $12,000 car with a $9,000 loan balance has $3,000 in equity, which falls well within the cap. Several state exemptions offer more room.

Household Goods, Clothing, and Jewelry

Federal law protects household furnishings, clothing, appliances, books, and similar belongings up to $800 per item and $16,850 total.² Jewelry has a separate cap of $2,125.¹ In practice, most household goods have low resale value, so trustees and creditors rarely pursue them.

Retirement Accounts

Retirement savings receive some of the strongest protections in the law, but the rules turn on the type of account.

Employer-sponsored plans such as 401(k)s, 403(b)s, and traditional pensions are protected under ERISA’s anti-alienation rules. Creditors generally cannot reach those funds at all, and there is no dollar cap. That protection applies both inside and outside bankruptcy.

IRAs and Roth IRAs are handled differently. In bankruptcy, they are protected up to an aggregate cap of $1,711,975 for cases filed between April 2025 and March 2028.³ Money rolled over from an employer plan into an IRA is generally protected in full, without regard to that cap.

Wages

Federal law limits how much of your paycheck a creditor can take through garnishment. For ordinary consumer debts, the garnishable amount is the lesser of 25% of your disposable earnings or the amount by which your weekly disposable pay exceeds 30 times the federal minimum wage of $7.25 per hour. If your disposable weekly income is $217.50 or less, nothing can be garnished.⁴ Disposable earnings mean what’s left after legally required deductions like taxes, Social Security, and Medicare. Voluntary items like health insurance premiums or 401(k) contributions don’t reduce the figure.

Child support and alimony take a bigger bite. Garnishment for family support can reach 50% of disposable earnings if you’re currently supporting another spouse or child, or 60% if you’re not. Payments more than 12 weeks overdue add another 5%.⁴

Social Security and Other Government Benefits

Social Security benefits carry absolute protection from private creditors. Under 42 U.S.C. 407, the payments cannot be subject to garnishment, levy, attachment, or any other legal process, and courts have enforced the statute consistently.⁵

Similar protection extends to Supplemental Security Income (SSI), veterans’ benefits, federal railroad retirement, and federal employee retirement payments. When these funds are directly deposited into a bank account, the bank must protect at least two months’ worth of deposits before freezing any funds in response to a garnishment order. There is one important exception: federal agencies themselves, including the IRS and the Department of Education, can garnish up to 15% of Social Security or SSDI benefits to collect tax debts or defaulted federal student loans.⁶

The Wildcard and Tools of the Trade

The federal wildcard exemption protects $1,675 of any property, plus up to $15,800 of any unused portion of your homestead exemption.² The wildcard is especially useful for renters, who can roll the unused homestead amount into it and cover things like cash, a tax refund, or a second vehicle, up to about $17,475.

Tools of the trade, meaning the professional books, equipment, and implements you need to make a living, are separately protected up to $3,175 under federal law.² Some states give self-employed people considerably more.

Debts That Cut Through Exemptions

Exemptions do not stop every collector. A handful of debts can reach property that would otherwise be safe.

Federal tax debts operate under a separate rulebook. The IRS levy authority in 26 U.S.C. 6334 overrides most exemptions that block private creditors, and the IRS has its own, much narrower list of property that is off limits.⁷

Domestic support obligations, meaning child support and alimony, are not dischargeable in bankruptcy and can reach property that would be exempt from an ordinary creditor.⁸

Federal student loan debt also survives bankruptcy unless you can prove undue hardship, which courts read narrowly. Federal agencies can garnish Social Security benefits to collect on defaulted loans.⁸

How to Claim What’s Protected

Exemptions don’t apply automatically outside of bankruptcy. You have to assert them.

In bankruptcy, you list each asset on Schedule C of your petition and cite the statute that protects it.⁹ Creditors and the trustee then have 30 days after the meeting of creditors to object. If no one objects in that window, the property is treated as exempt.¹⁰

Outside bankruptcy, when a judgment creditor tries to seize property or garnish wages, you generally file a claim of exemption with the court or the levying officer. Deadlines and forms vary by state, but the burden is on you. Identify the property, cite the exemption, and back it up with documentation like bank statements showing direct-deposited benefits or pay stubs showing your earnings. Miss the deadline and the protection can be lost even for property that clearly qualifies.

1
Office of the Law Revision Counsel. 11 U.S. Code 522 – Exemptions
2
Federal Register. Adjustment of Certain Dollar Amounts Applicable to Bankruptcy Cases
3
Nolo.com. The Federal Bankruptcy Exemptions
4
U.S. Department of Labor. Fact Sheet 30 – Wage Garnishment Protections of the Consumer Credit Protection Act
5
Office of the Law Revision Counsel. 42 U.S. Code 407 – Assignment of Benefits
6
Consumer Financial Protection Bureau. Can a Debt Collector Take or Garnish My Wages or Benefits
7
Office of the Law Revision Counsel. 26 U.S. Code 6334 – Property Exempt From Levy
8
Office of the Law Revision Counsel. 11 U.S. Code 523 – Exceptions to Discharge
9
Legal Information Institute. Federal Rules of Bankruptcy Procedure Rule 4003 – Exemptions
10
Office of the Law Revision Counsel. 11 U.S. Code Appendix Rule 4003 – Exemptions