What property can you keep in bankruptcy?

How do exemptions work?

When you file, the law creates an estate made up of all your legal and equitable interests in property as of that date. That includes property someone else is holding if you have an interest in it. Creditors are generally paid from the part of the estate that is not exempt.1 2

Exempt property is property that the Bankruptcy Code or state law lets an individual keep from unsecured creditors. So the order is: your property goes into the estate, and your exemptions bring the protected items back out.3

Exemptions are not applied for you. You list the property you claim as exempt on Schedule C, which is Official Form 106C. Unless someone with a stake in the case objects, the property you list is exempt.4 6 7

What does the federal exemption list cover?

The federal list protects the kinds of property below. Most categories have a dollar limit.

• Your interest in the home you live in, known as the homestead exemption, or in a burial plot. The federal homestead exemption is $31,575 for cases filed on or after April 1, 2025.4 5
• One motor vehicle.4
• Household furnishings and goods, clothing, appliances, books, animals, crops and musical instruments kept for personal, family or household use, and jewelry.4
• An interest in any property up to a set amount, often called the wildcard, plus part of any home exemption you did not use.4
• Tools of your trade, an unmatured life insurance contract and professionally prescribed health aids.4
• The right to receive benefits such as Social Security, unemployment, veterans' and disability benefits, and alimony or support that is reasonably necessary.4
• Certain compensation payments, such as crime victim awards and some wrongful death and personal injury payments.4
• Retirement funds held in tax-exempt accounts.4

The home figure is the only federal amount printed here, and it applies to cases filed on or after April 1, 2025. Confirm the current limit for any other category with a lawyer or in the statute before you rely on it.4 5

Do you use the federal list or your state's list?

That depends on state law. Many states have adopted their own exemption law in place of the federal exemptions. In other places you may choose between the federal exemptions and the state ones. Whether a piece of property is exempt is therefore often a question of state law.1 4 5

Which state's law applies depends on where you have been domiciled. It is the law of the place where your domicile was located for the 730 days before filing. If your domicile was not in a single state for that 730-day period, it is the place where you were domiciled for the 180 days before the 730-day period, or for the longer part of those 180 days.4

State amounts are not listed here. The federal courts tell debtors to consult an attorney to determine the exemptions available in the state where they live.1

What can a Chapter 7 trustee actually sell?

A trustee looks at what each item is worth, what is owed against it and how much of it you have exempted.

When everything is exempt or subject to valid liens, the trustee normally files a report that there are no assets, and unsecured creditors receive nothing from the case.1

What should you watch when you claim exemptions?

Objections have a deadline. A party in the case may generally object to a claimed exemption within 30 days after the meeting of creditors concludes, or after an amended list is filed, whichever is later.4 6 7

Values matter. Because the trustee compares what an item is worth with the liens on it and your exemption, a careless value can make protected property look unprotected, or the reverse.1

Some liens can be removed. The Bankruptcy Code lets a debtor undo certain court judgment liens to the extent the lien impairs an exemption. Ask a lawyer whether it applies to you and how to request it.4

Do exemptions matter in Chapter 13?

Yes, in a different way. In Chapter 13 you keep your property, but unsecured creditors must receive at least as much under the plan as they would have received if your assets had been liquidated under Chapter 7. Because creditors in a liquidation are generally paid from property that is not exempt, your exemptions affect that minimum.9 10 1 2