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

Most of the property you actually need to live on is off-limits to creditors. Federal and state law together decide what property is exempt from creditors, and the categories are consistent even when the dollar amounts aren’t: equity in your home up to a cap, one vehicle, retirement savings, household goods and clothing, tools you use for work, a portion of your wages, and government benefits like Social Security. What varies is how much of each you get to keep, and that depends on which state you live in.

Which Exemption List Applies to You

Federal bankruptcy law under 11 U.S.C. 522 gives every debtor the right to exempt certain property, but each state decides whether its residents can use the federal list or must use the state’s own. About 35 states have opted out of the federal system, so residents there are stuck with the state list. In the remaining states, you pick whichever set works better, but you can’t mix items from both.¹

Which state counts as yours depends on where you’ve lived. You use the exemptions of the state where you’ve had your home for the 730 days (two years) before filing bankruptcy. If you moved during that window, you use the state where you lived for most of the 180 days before that two-year lookback began.¹ The rule blocks last-minute moves to states with generous exemptions.

Home Equity

The homestead exemption protects equity in your primary residence. Under the federal system, you can shield up to $31,575 in home equity for cases filed between April 1, 2025 and March 31, 2028.² State homestead exemptions vary enormously. Some cap protection at modest amounts; others offer unlimited protection regardless of value.

One important limit applies even in generous states. If you bought your home within 1,215 days (about three years and four months) before filing, federal law caps your homestead exemption at $214,000 of the equity acquired during that period.¹

Your Car

The federal motor vehicle exemption covers up to $5,025 in equity in one vehicle.² Equity means market value minus what you still owe. If your car is worth $12,000 and you owe $9,000, you have $3,000 in equity, well under the federal cap. State vehicle exemptions range widely, with some offering considerably more.

Retirement Accounts

Retirement savings get some of the strongest creditor protection in the law, but the rules split by account type.

Employer-sponsored plans like 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, there is no dollar cap, and the protection applies both inside and outside bankruptcy.

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

Wages

Federal law limits how much of your paycheck a creditor can garnish. 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 an hour. If you earn $217.50 per week or less in disposable income, nothing can be garnished.⁴

Disposable earnings means what’s left after legally required deductions: federal and state taxes, Social Security, Medicare. Voluntary deductions like health insurance premiums or 401(k) contributions don’t reduce the number.

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 has ironclad federal protection. Under 42 U.S.C. 407, payments cannot be subject to garnishment, levy, attachment, or any other legal process by private creditors. The statute is unusually absolute, and courts have consistently enforced it.⁵

The same protection covers Supplemental Security Income (SSI), veterans’ benefits, federal railroad retirement, and federal employee retirement payments. When these benefits are directly deposited into a bank account, your bank must protect at least two months’ worth of deposits before freezing anything in response to a garnishment order.

There is one meaningful exception. Federal agencies themselves, like the IRS or the Department of Education, can garnish up to 15% of Social Security or SSDI benefits for tax debts or defaulted student loans.⁶

Household Goods, Jewelry, Tools, and the Wildcard

Federal law protects household furnishings, clothing, appliances, and books up to $800 per item and $16,850 total.² Jewelry has a separate $2,125 total exemption.¹ In practice, most household goods have low resale value, so trustees rarely bother with them.

Tools of the trade, meaning professional books, equipment, and implements you need for your livelihood, are separately protected up to $3,175 under federal law.² Some states are considerably more generous, especially for self-employed people.

The federal wildcard exemption protects $1,675 of any property that doesn’t fit another category, plus up to $15,800 of any unused portion of your homestead exemption.² The wildcard matters most to renters: if you don’t own a home, you can roll most of the unused homestead amount into the wildcard, giving you up to $17,475 to apply to anything you own, including cash, a tax refund, or a second vehicle.

Debts That Get Around Exemptions

Exemptions don’t stop every creditor. Some debts can reach property that would otherwise be protected from ordinary collection.

The IRS plays by different rules. Under 26 U.S.C. 6334, federal tax levies override most exemptions that would stop a private creditor, and the IRS has its own much narrower list of exempt property.⁷

Child support and alimony are not dischargeable in bankruptcy and can reach property that would otherwise be exempt from ordinary creditors.⁸

Federal student loans survive bankruptcy unless you can prove undue hardship, which courts read very strictly. Federal agencies can also garnish Social Security for defaulted student loan debt.⁸

People sometimes assume that filing bankruptcy and claiming exemptions wipes the slate clean. It doesn’t for debts that can’t be discharged. You keep your exempt property, but those debts follow you out the other side.

How to Actually Claim the Protection

In bankruptcy, you list each asset on Schedule C (Form 106C), identifying the property and the statute that protects it.⁹ Creditors and the trustee then have 30 days after the meeting of creditors to object. If nobody objects in that window, the property is treated as exempt even if the exemption cited was technically wrong.

Outside bankruptcy, when a creditor with a court judgment tries to garnish wages or seize property, you generally have to file a claim of exemption with the court or the levying officer. Deadlines and forms vary by state, and the burden is on you. If you don’t file the claim, the exemption doesn’t apply automatically. You’ll usually need to identify the specific property, explain why it qualifies, and provide supporting documents like bank statements showing direct-deposited benefits or pay stubs showing your earnings. Knowing what’s protected before collection starts is how you respond in time when a creditor comes after you.

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