Bankruptcy Homestead Exemption by State: Caps and Federal Option

The bankruptcy homestead exemption varies by state from as little as $5,000 in Kentucky, Tennessee, and Virginia to unlimited protection in Florida, Texas, and a handful of others. For cases filed between April 1, 2025, and March 31, 2028, federal law offers an alternative exemption of $31,575 per filer, but only residents of about a third of states can choose it.¹ Which number actually applies to your home depends on where you’ve lived for the last two years, when you bought the house, and whether your state requires you to file paperwork before the exemption attaches.

What the Exemption Actually Protects

The homestead exemption covers equity, not the home’s sale price. Equity is the market value minus every mortgage, home equity loan, tax lien, and other secured debt on the property. A $350,000 home with a $300,000 mortgage has $50,000 in equity, and that $50,000 is the figure your exemption needs to cover.

This is why homeowners with heavy mortgages often sail through bankruptcy even in low-exemption states. A debtor with a $500,000 home and a $480,000 mortgage has only $20,000 of exposed equity. A paid-off house in the same state is a different story, because every dollar of market value is on the table.

States With Unlimited Homestead Exemptions

Eight jurisdictions impose no dollar cap on the homestead exemption, controlling the protection through acreage limits instead: Florida, Texas, Kansas, Iowa, Oklahoma, South Dakota, Arkansas, and the District of Columbia. Each draws a line between urban and rural property:

Florida: half an acre within a municipality or 160 contiguous rural acres.²
Texas: 10 urban acres (one or more lots), or up to 200 rural acres for a family homestead and 100 for a single adult.
Kansas: one acre within city limits or 160 farming acres.³
Iowa: half an acre in a city or 40 rural acres.
Oklahoma: one acre in a city or 160 rural acres.
South Dakota: one acre in a city or 160 rural acres.

“Unlimited” has caveats. Property above the acreage cap falls outside the exemption, and federal restrictions on recently purchased homes override state law regardless of how generous it is.

States With Dollar-Cap Exemptions

Most states set a specific dollar amount, and the spectrum is wide.

California sits at the high end with a variable formula tied to each county’s median home sale price. The exemption is the greater of the countywide median (up to a ceiling) or a statutory floor. After annual inflation adjustments, the floor exceeded $361,000 and the ceiling surpassed $722,000 as of 2025.⁴ The county-by-county structure acknowledges that a San Francisco home and a Fresno home live in different markets.

New York uses a three-tier system by county. The highest exemption covers the five boroughs and surrounding suburban counties, a middle tier applies to mid-Hudson Valley and Capital Region counties, and a lower figure applies everywhere else. The state legislature adjusts the amounts periodically.

At the bottom, Kentucky, Tennessee, and Virginia each set the base exemption at just $5,000. Some of these states bump the figure up for elderly filers, married couples, or those with dependents, but the enhanced amounts rarely keep pace with real home values. A debtor in these states with meaningful equity should expect a Chapter 7 trustee to move on the house.

The Federal Alternative

Federal law offers its own homestead exemption, currently $31,575 per filer for cases filed between April 1, 2025, and March 31, 2028.¹ A married couple filing jointly can double that to $63,150 if both have an ownership interest. These amounts adjust every three years based on the Consumer Price Index, with the next change due April 1, 2028.⁵

Roughly two-thirds of states have opted out, meaning their residents must use state exemptions. The states that still allow a choice are Arkansas, Connecticut, the District of Columbia, Hawaii, Massachusetts, Michigan, Minnesota, New Hampshire, New Jersey, New Mexico, Pennsylvania, Rhode Island, Texas, Vermont, Washington, and Wisconsin. If you live in one of these jurisdictions, you pick one complete set of exemptions or the other on Schedule C. You cannot mix items from both lists.⁶

Why Renters and Low-Equity Filers Sometimes Pick Federal

The federal package includes a wildcard that makes it attractive even when the homestead itself is irrelevant. You can protect $1,675 of any property under the federal scheme, plus roll over any unused portion of your homestead exemption toward the wildcard, up to an additional $15,800.¹

If you don’t own a home, your full $31,575 homestead goes unused. Rolling the maximum into the wildcard produces a $17,475 cushion for cash, vehicles, electronics, or anything else. Choosing federal exemptions purely for that wildcard is a common strategy in opt-in states.

Picking Between the Two

If the state homestead protects more equity than $31,575, state usually wins. If your home equity is modest or zero but you have other assets to shield, the federal wildcard often wins. The right call requires adding up every asset, checking both exemption lists in full, and comparing the total protected under each. Federal exemptions for vehicles, retirement accounts, personal property, and tools of the trade may differ from state equivalents, and the overall package is what matters. The choice is locked in once the case closes.

Which State’s Law Applies to You

Living in a state does not automatically let you use its exemptions. Federal law requires 730 days of residency in the same state before your filing date.¹ The rule exists to stop people from moving to a generous state right before filing.

If you moved within the last two years, the law looks back further. You use the exemptions of whichever state you lived in for the majority of the 180 days immediately before that two-year window started.⁷ Someone who moved from Ohio to Florida 18 months ago would likely need to apply Ohio law, not Florida’s. And Ohio’s exemption may not cover property located in Florida.

This can leave a recent mover with no applicable state exemption at all. The bankruptcy code’s safety net lets you fall back on federal exemptions when the residency rules disqualify you from any state’s scheme, even if your state has opted out.⁷ Trustees and creditors examine residency timelines carefully, and misrepresenting where you lived can cost the exemption or get the case dismissed.

Federal Cap on Recently Purchased Homes

Even in unlimited-exemption states, federal law caps the equity you can protect in a home acquired within 1,215 days (roughly three years and four months) before filing. The cap under 11 U.S.C. § 522(p) is $214,000 effective April 1, 2025.⁵ Equity above that figure in a recently acquired home goes to the trustee no matter what state law says.

Congress added this rule to stop wealthy debtors from converting cash into expensive homes right before filing in states like Texas or Florida. The cap does not reset when you sell one home and roll the proceeds into another within the same state, which protects long-time homeowners who move for work or family. Trustees review closing statements and bank records to trace the source of funds in any home purchase inside the lookback window.

The 10-Year Fraudulent Conversion Lookback

A separate rule reaches back a decade. Under 11 U.S.C. § 522(o), your homestead exemption is reduced by the amount of equity traceable to property you disposed of within the 10 years before filing, if the disposition was intended to defraud creditors.¹

A classic case: a debtor sells a $200,000 vacation home, pays down the mortgage on their residence, and files for bankruptcy. If the trustee can show the sale was meant to shield the money from creditors, the homestead exemption drops by $200,000. The reduction is dollar-for-dollar against the amount traceable to the transfer. This rule operates independently of the 1,215-day cap, and both can apply to the same case.

What the Exemption Does in Chapter 7 vs. Chapter 13

In Chapter 7, the exemption decides whether you keep the house. The trustee asks whether selling the property would produce money for creditors after paying off the mortgage, covering sale costs, and handing you your exempt amount. If equity exceeds the exemption, the trustee can sell, pay you the exempt portion in cash, and distribute the rest.

In Chapter 13, nobody sells the home. You keep everything and repay creditors through a three-to-five-year plan. The exemption still matters because the plan must pay unsecured creditors at least what they would have received in a Chapter 7 liquidation. More exempt equity means a lower benchmark and lower monthly payments. A filer with $100,000 of non-exempt equity must pay unsecured creditors at least $100,000 over the plan’s life.

Tenancy by the Entirety

Married couples in states that recognize tenancy by the entirety have a separate layer of protection. Federal bankruptcy law shields entirety property from creditors of just one spouse.¹ If only one spouse files and the debt is not joint, the home can be fully protected regardless of equity or the state’s dollar cap.

The protection depends on whether your state recognizes the form under its property law, since the bankruptcy code defers to state treatment outside of bankruptcy. If both spouses owe the debt, or both file, the shield disappears. For couples where one spouse carries the unsecured debt alone, this ownership form can beat any homestead cap on the books.

States That Require You to File a Declaration

In most states the homestead exemption attaches automatically when you file. A few require you to record a formal declaration with the county recorder or registry of deeds first. Massachusetts, Montana, Nevada, and Virginia all require one. Texas does as well, though the court will file one for you for a fee if you haven’t done it yourself. Recording fees run roughly $25 to $115 depending on the jurisdiction.

Skipping this step in a state that requires it can erase the exemption. The declaration itself is usually a one-page form identifying the property as your homestead, but it generally must be on file before or at the time you file the bankruptcy petition. If you live in one of these states and bankruptcy is on the horizon, record the declaration early.

1
Office of the Law Revision Counsel. 11 USC 522 Exemptions
2
FindLaw. Florida Constitution Art X, Section 4
3
Kansas Office of Revisor of Statutes. Kansas Statutes 60-2301
4
Los Angeles County Department of Consumer and Business Affairs. Homestead Protection
5
Federal Register. Adjustment of Certain Dollar Amounts Applicable to Bankruptcy Cases
6
United States Courts. Schedule C – The Property You Claim as Exempt
7
Office of the Law Revision Counsel. 11 US Code 522 – Exemptions