What Are State Exemptions in Bankruptcy? Lists, Residency, and Limits

State exemptions in bankruptcy are laws that identify specific property creditors cannot take from you when you file. Every state keeps its own list, covering essentials like home equity, a vehicle, household goods, work tools, and retirement savings, each with its own dollar limit. These protections exist so people with overwhelming debt can keep enough to live on and keep earning, instead of losing everything. The rules vary sharply from one state to the next, and whether you keep or lose an asset often turns on which exemption list applies to you and how much of its limit you can claim.

What Exemptions Do in a Bankruptcy Case

Exemptions work differently depending on which chapter you file.

In Chapter 7, the court appoints a trustee who can sell your non-exempt property and pay the proceeds to creditors. Anything covered by an exemption stays with you. If your car has $3,000 in equity and your state’s vehicle exemption covers $5,000, the trustee cannot touch it. If the equity is higher than the exemption, the trustee can sell the car, pay you your exempt amount, and distribute the rest.

In Chapter 13, you keep all your property regardless of exemptions. Instead, the exemptions set a floor for how much you must pay unsecured creditors through your repayment plan. More exempt property means less non-exempt value in the estate, which means lower plan payments. Chapter 7 exemptions protect your assets from being sold; Chapter 13 exemptions protect your monthly budget.

Exemptions matter outside bankruptcy too. When a creditor wins a lawsuit and tries to garnish wages or levy a bank account, state exemption laws limit what they can reach. The specific protections differ, but the principle is the same: certain property is off-limits whether you file or not.

What Property Gets Protected

Exemption lists generally cover the same categories, though the dollar amounts range widely by state.

Homestead. Equity in your primary residence. Caps range from modest amounts to unlimited protection in about seven states, which may still limit the acreage. For comparison, the federal homestead exemption is $31,575 per person.¹
Motor vehicle. Equity in one car, generally running from about $1,000 to $12,000 depending on the state. The federal amount is $5,025.¹
Personal property. Household goods, furniture, clothing, appliances. Under the federal list, you can protect up to $800 per item and $16,850 in total, with a separate $2,125 cap for jewelry.¹
Tools of the trade. Equipment, books, and instruments you need for work. The federal amount is $3,175; state amounts vary.
Wildcard. A flexible exemption you can apply to any property, useful for cash, tax refunds, or extra equity that spills over a category cap. The federal wildcard is $1,675, plus up to $15,800 of any unused homestead exemption, which can give a non-homeowner a wildcard worth more than $17,000.²

The federal amounts took effect April 1, 2025 and apply to cases filed through March 31, 2028. They adjust every three years for inflation.³

Retirement Accounts, Social Security, and Health Aids

Retirement savings get some of the strongest protection in bankruptcy, and the rules are federal rather than state-by-state. Employer-sponsored plans that qualify under ERISA, including 401(k)s, 403(b)s, pensions, and profit-sharing plans, are excluded from the bankruptcy estate entirely under 11 U.S.C. § 541(c)(2). There is no dollar cap. Whether you have $5,000 or $5 million in a 401(k), it stays yours.

Traditional IRAs and Roth IRAs are also protected, but with a ceiling. The current federal cap on IRA exemptions is $1,711,975 across combined balances. Funds in an IRA that came from a rollover of an ERISA-qualified plan, such as a 401(k) rolled into an IRA, don’t count against that cap.¹

One catch matters: the protection covers money sitting in a retirement account. Once you pull funds out and put them into a regular bank account, they lose that status and become reachable by creditors. Draining a retirement account before filing is one of the most common and costly mistakes.

Social Security benefits receive blanket federal protection no state can override. Under 42 U.S.C. § 407, Social Security payments cannot be garnished, levied, attached, or reached in any bankruptcy proceeding.⁴ Veterans’ benefits are similarly protected. The federal exemptions also cover unemployment compensation and public assistance.¹ Professionally prescribed health aids like wheelchairs and hearing aids are fully exempt under federal law with no dollar limit.

State List or Federal List

Federal bankruptcy law has its own exemption list, but it lets each state decide whether residents may use it. Roughly two-thirds of states have opted out, meaning residents must use the state’s exemption list only.⁵ If you live in an opt-out state, you have no choice, even if the federal amounts would protect more of your property.

In the remaining states, you can pick whichever list helps you more. The choice is all-or-nothing. You cannot combine the best parts of both. If the federal homestead number is higher but your state’s vehicle exemption beats the federal one, you still have to commit to a single system. Making the choice well means comparing your actual assets against every exemption on both lists, not just the headline categories.

When married couples file jointly, both spouses must use the same system. If they disagree, the law defaults to the federal exemptions in states that allow them.⁵

The Two-Year Residency Rule

You cannot move to a state with generous exemptions and immediately file for bankruptcy there. Federal law requires that you have lived in the same state for at least 730 days (two years) before filing to use that state’s exemptions.⁵ The rule exists to stop exemption shopping.

If you haven’t lived in one state for the full two years, the court looks further back. It examines where you lived during the 180 days before that two-year window and uses the exemptions from wherever you spent most of that time.⁵ If you moved from Ohio to Florida 18 months ago, you would likely use Ohio’s exemptions when filing in Florida. There is a safety net: if the domicile rules leave you ineligible for any exemptions at all, you can fall back on the federal list.¹

Doubling for Married Couples

When a married couple files a joint bankruptcy, each spouse applies the full exemption amount separately to their interest in shared assets. This is called doubling. Under 11 U.S.C. § 522(m), exemptions “apply separately with respect to each debtor in a joint case.”¹ If the applicable law protects $5,000 in household goods, a joint filing shields $10,000.

Doubling is straightforward for most personal property categories. The homestead exemption is less uniform. Some states allow couples to double the homestead amount; others cap it at a single exemption regardless of whether one or both spouses own the property. Whether doubling applies often depends on how the title is held and whether both spouses have an ownership interest.

Debts That Exemptions Don’t Stop

Exemptions have real limits. Certain debts can reach property that is otherwise fully exempt.

Tax liens. A properly filed tax lien attaches to exempt property, including your home. A bankruptcy discharge wipes out your personal liability, but the lien survives and can still be enforced against the property.¹
Child support and alimony. These domestic support obligations can be collected from exempt property. They carry the highest priority in bankruptcy, and exemptions don’t shield past-due amounts.
Secured debts. Exemptions protect your equity, not the lender’s collateral. If you owe $15,000 on a car worth $20,000 and your state exempts $5,000 of vehicle equity, the exemption covers your $5,000 slice. The lender still holds the lien, and you typically keep paying or surrender the vehicle.

In a Chapter 7 case, any value above your exemption limits is non-exempt. The trustee can sell those assets and pay creditors, starting with priority debts like support obligations and taxes, then moving to unsecured debts like credit cards and medical bills.

How Property Is Valued

Whether an asset tops your exemption limit depends on what it’s worth, and bankruptcy uses fair market value: what a willing buyer would pay a willing seller with no pressure to close. That is not what you paid for it, and not the replacement cost. For most used personal property, fair market value is a lot lower than purchase price. A couch bought for $2,000 might be worth $200 after a few years.

For real estate and vehicles, fair market value means equity: the current market price minus what you owe on any loan secured by the property. A home worth $300,000 with a $280,000 mortgage has $20,000 in equity, and that figure is what you compare to your homestead exemption. Valuing assets accurately matters. Overestimating can make you think property is at risk when it isn’t; underestimating can leave something exposed that you thought was protected.

1
Office of the Law Revision Counsel. 11 U.S. Code 522 – Exemptions
2
National Consumer Law Center. April 1 Increase of Federal Bankruptcy Exemptions, Other Dollar Amounts
3
Office of the Law Revision Counsel. 11 U.S.C. 104 – Adjustment of Dollar Amounts
4
Office of the Law Revision Counsel. 42 U.S. Code 407 – Assignment of Benefits
5
Office of the Law Revision Counsel. 11 U.S.C. 522 – Exemptions