When you file for bankruptcy, you can keep any property that fits within the dollar limits of the exemptions you claim. Exemptions protect your home equity, your car, ordinary household goods, retirement savings, government benefits, and, through a flexible “wildcard,” almost any other asset up to a set amount. What you actually keep depends on which exemption list applies to you and how the value of each asset compares to its cap.
How Exemptions Decide What You Keep
Filing a bankruptcy petition sweeps nearly all of your legal and financial interests in property into a legal estate.1Office of the Law Revision Counsel. 11 USC 541 – Property of the Estate That includes your house, bank accounts, vehicles, investments, and personal belongings. Exemptions pull specific categories of property back out of that estate so the trustee cannot reach them.2Office of the Law Revision Counsel. 11 USC 522 – Exemptions
Each exemption covers a category up to a stated dollar amount, and the amount that matters is your equity, not the sticker value. Equity is what would be left if the asset were sold and any loans against it were paid off. If your equity falls within the exemption, you keep the asset. If it exceeds the limit, the trustee may sell the asset, hand you the exempt portion in cash, and use the rest to pay creditors. The federal dollar figures below reflect the amounts effective April 1, 2025.
Your Home
The homestead exemption covers equity in the place you actually live in, not a rental, second home, or investment property. Federal law protects up to $31,575 for an individual filer, or $63,150 for a married couple filing jointly.2Office of the Law Revision Counsel. 11 USC 522 – Exemptions
Your equity is the home’s current market value minus every mortgage and lien against it. If that number falls within the cap and you stay current on the mortgage, you keep the house. State homestead exemptions vary enormously—some states protect only a small amount, others protect hundreds of thousands of dollars, and a few offer unlimited protection subject to acreage limits.
Your Car
The motor vehicle exemption protects equity in a car, truck, van, or motorcycle. The federal limit is $5,025.2Office of the Law Revision Counsel. 11 USC 522 – Exemptions Once again, what counts is equity: a $12,000 car with a $9,000 loan balance has $3,000 in equity and sits comfortably within the cap.
A vehicle you own outright is more exposed. If your car is worth $15,000 free and clear, only $5,025 of that equity is protected under the federal list; the trustee could sell it, return $5,025 to you, and pay creditors from the rest. A second vehicle may be protected by adding the wildcard exemption on top. To keep any financed vehicle, you also have to keep paying the loan—falling behind gives the lender grounds to repossess whether or not you filed.
Household Goods, Jewelry, and Work Tools
Everyday belongings held for personal or family use—furniture, clothing, appliances, books, electronics, children’s toys, hobby equipment—are protected under the household goods exemption. The federal limit is $800 per individual item and $16,850 in total.2Office of the Law Revision Counsel. 11 USC 522 – Exemptions The per-item cap is based on current resale value, not what you paid, and most used household items come in well under it. Families rarely lose basic home furnishings.
Jewelry has its own smaller category. Federal law protects up to $2,125 in total value across jewelry held for personal or family use.3Office of the Law Revision Counsel. 11 US Code 522 – Exemptions Wedding rings can also fit inside the broader household goods category, and the wildcard can cover excess value in a ring, watch collection, or heirloom.
If you use specialized equipment to earn a living, the tools-of-the-trade exemption protects up to $3,175 in implements, professional books, and similar items used by you or a dependent in your work.2Office of the Law Revision Counsel. 11 USC 522 – Exemptions
Cash, Bank Balances, and the Wildcard
There is no dedicated federal exemption for cash. Instead, the federal system offers a wildcard exemption that can be applied to any property—money in a checking account, a tax refund, a second vehicle, a collection, anything that does not fit neatly elsewhere. The wildcard is $1,675, plus up to $15,800 of any unused portion of your homestead exemption.2Office of the Law Revision Counsel. 11 USC 522 – Exemptions A renter with no home equity can stack these for up to $17,475 of flexible protection. Spouses filing jointly each get their own wildcard.
Tax refunds deserve their own note. A refund tied to income you earned before filing is part of the estate, so a refund you have not yet received when you file can be claimed by the trustee. The wildcard, or a state-specific cash exemption, is the usual way to protect it. A refund based on income earned after your filing date belongs to you.
Retirement Accounts
Retirement savings get some of the strongest protection in the entire system. ERISA-qualified plans—401(k)s, 403(b)s, pensions, and profit-sharing plans—are fully excluded from the bankruptcy estate with no dollar cap, as long as the money stays in the qualified plan.2Office of the Law Revision Counsel. 11 USC 522 – Exemptions SEP IRAs and SIMPLE IRAs are treated the same way and receive unlimited protection.
Traditional and Roth IRAs are protected under a combined cap of $1,711,975.4Office of the Law Revision Counsel. 11 USC 522 – Exemptions Amounts rolled over from an employer plan into an IRA do not count against that cap, and a court can raise the limit if the interests of justice require it.
Government Benefits and Support Income
Social Security, unemployment compensation, veterans’ benefits, disability payments, and local public assistance benefits are exempt from the estate regardless of amount.2Office of the Law Revision Counsel. 11 USC 522 – Exemptions These protections exist so filers keep a basic income stream through and after the case.
Life Insurance and Personal Injury Awards
The cash surrender value of an unmatured life insurance policy you own—a whole life or universal life policy you have not cashed out—is exempt up to $16,850 under federal law.3Office of the Law Revision Counsel. 11 US Code 522 – Exemptions Term life policies usually have no cash value and are not at risk. The wildcard can cover cash value above the cap.
Personal injury awards have their own protection. Up to $31,575 from a payment for personal bodily injury is exempt, not counting amounts allocated to pain and suffering or to 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 carry their own separate protections on the federal list.
Federal List or State List
Every debtor has a right to claim exemptions, but states can require residents to use the state’s own list instead of the federal one, and many do.2Office of the Law Revision Counsel. 11 USC 522 – Exemptions Where a state allows a choice, you pick one list and use it for everything; mixing individual exemptions between lists is not allowed.
The choice can dramatically change what you keep. A state may protect far more home equity than the federal $31,575 but far less in a vehicle or personal property, or the reverse. When both lists are open to you, comparing them side by side against the assets you actually own is one of the highest-impact decisions in the case.
The 730-Day Residency Rule
A recent move complicates the choice. To use your current state’s exemptions, you generally must have lived there for at least 730 days before filing.2Office of the Law Revision Counsel. 11 USC 522 – Exemptions If you haven’t, you use the exemptions of the state where you lived for most of the 180 days before that two-year window. In the rare case where the residency rule leaves you with no state list to use, the federal list is available as a fallback.
Chapter 7 Versus Chapter 13
Which chapter you file changes how exemptions affect you. In Chapter 7, the trustee can sell non-exempt property to pay creditors, so exemption limits directly determine what stays with you and what is lost.
In Chapter 13, you keep all of your property and instead repay creditors through a three- to five-year plan.5United States Courts. Chapter 13 – Bankruptcy Basics Exemptions still matter, because your plan has to pay unsecured creditors at least as much as they would have received from a Chapter 7 liquidation of your non-exempt assets. More non-exempt equity means higher monthly payments, but nothing is sold.
When Your Equity Exceeds a Limit
Non-exempt equity does not automatically cost you the asset. A Chapter 7 trustee only sells property when the sale will produce meaningful funds for creditors after paying the sale’s costs and returning your exempt share. If the non-exempt slice is small, the trustee may abandon the asset back to you rather than bother.
You can also try to buy back the non-exempt portion. That means paying the trustee an amount equal to your non-exempt equity, usually with money from outside the estate such as a loan from a family member, in exchange for keeping the property. Trustees often accept these offers because it avoids the expense of a sale.
If a buyback is not workable and you have significant non-exempt assets, filing Chapter 13 lets you keep everything and pay the equivalent value over three to five years.5United States Courts. Chapter 13 – Bankruptcy Basics For filers with real home equity or valuable property they want to protect, that route often preserves more than Chapter 7 would.