Federal Bankruptcy Exemptions

Find out if you can use the federal bankruptcy exemptions and what property they protect.

The federal bankruptcy exemptions are designed to protect a certain amount of your property in a Chapter 7 bankruptcy.  They also help in determining how much certain creditors will get paid through your bankruptcy plan if you file a Chapter 13 bankruptcy.  If you can “exempt” property in bankruptcy it means that the Chapter 7 trustee cannot take it and sell it to pay your creditors.  Read on to learn more about federal bankruptcy exemptions and whether you can take advantage of them.

(To learn more about exemptions and how they work in both Chapter 7 and Chapter 13 bankruptcy, see the articles in our Bankruptcy Exemptions topic area.)

Are You Allowed To Use The Federal Bankruptcy Exemptions?

In addition to the federal bankruptcy exemptions, each state has its own set of state bankruptcy exemptions.  Many states require their citizens to use their own state exemption system and do not allow bankruptcy filers to take advantage of the federal exemptions.  Some states do allow bankruptcy filers a choice between their state exemption system and the federal exemptions but even if you live in one of these states you must choose one system or the other (you cannot mix and match from both). 

Currently, the following states offer you a choice and allow you to use federal exemptions:  Alaska, Arkansas, Connecticut, District of Columbia, Hawaii, Kentucky, Massachusetts, Michigan, Minnesota, New Hampshire, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Texas, Vermont, Washington, and Wisconsin.  If you don’t live in these states, then you cannot use the federal bankruptcy exemptions.

How Much Property Can I Protect?

Listed below are the current federal bankruptcy exemption amounts for different types of property.  These amounts are updated every three years (the last adjustment was in 2016).  Also, married couples filing a joint bankruptcy get to double all federal exemption amounts (so you get twice the amounts listed below).  If no amount is listed, that means the entire property or asset is exempt.  For a more detailed list of federal bankruptcy exemptions please see Nolo's page on Bankruptcy Exemptions by State.

The Homestead Exemption

The federal homestead exemption protects the equity in your home.  Currently, the federal homestead exemption is $23,675. (To learn more about this exemption, see The Homestead Exemption.)

Personal Property Exemptions

Personal property is any property you own other than real estate. The federal exemptions relating to personal property are as follows:

  • $3,775 for a motor vehicle
  • $1,600 for jewelry
  • $12,625 in aggregate ($600 for each individual item) for household goods and furnishings, appliances, clothing, books, animals, crops, or musical instruments
  • $2,375 for professional books, implements, or tools of trade
  • professionally prescribed health aids
  • unmatured life insurance contracts other than credit life insurance, and
  • $12,625 in accrued interest, dividend, or loan value of life insurance contract.

Benefit And Support Exemptions

The following exemptions protect money you receive as a benefit or support:

  • alimony, support, or maintenance reasonably necessary for your support
  • payments under the life insurance of someone you were a dependent of reasonably necessary for your support, and 
  • Social security benefits, unemployment compensation and benefits, veteran’s benefits, public assistance, and disability or illness benefits.

Injury Recovery Exemptions

  • $23.675 for personal injury recovery not including pain and suffering or pecuniary loss
  • compensation for loss of future earnings necessary for support
  • payment for wrongful death of a person you depended on necessary for support, and
  • compensation as a crime victim.

Wildcard Exemption

The wildcard exemption can be used for any type of property.  Currently, this exemption is $1,250 plus $11,850 of any unused portion of your homestead exemption. (To learn more about how to use a wildcard exemption, see The Wildcard Exemption in Chapter 7 Bankruptcy.

Retirement Accounts

  • retirement accounts exempt from taxation (these generally include all legitimate retirement accounts), and
  • $1,283,025 for IRAs and Roth IRAs.

What If I Can’t Use The Federal Bankruptcy Exemptions?

If you live in a state that does not allow you to use the federal bankruptcy exemptions, then you must use your state’s exemption system.  Some states have exemptions that are more generous than the federal ones but other states do not allow you to exempt as much.

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