Bankruptcy Exemptions for Specific Assets/Property Types

If you’re facing bankruptcy, you’re likely worried about losing everything you own. However, the good news is that federal and state bankruptcy laws provide exemptions that allow you to protect certain types of assets and property from being liquidated during the bankruptcy process.

Understanding what property and assets are typically exempt can help put your mind at ease as you navigate the bankruptcy filing.

In this article, we’ll take a closer look at the most common bankruptcy exemptions, so you can feel more confident about protecting your belongings.

Homestead Exemption

One of the most significant bankruptcy exemptions is the homestead exemption. This allows you to protect a certain amount of equity in your primary residence from being seized and sold by the bankruptcy trustee.

The homestead exemption amount varies by state, but many states allow you to exempt $25,000 or more in home equity.

For example, in California the homestead exemption is $600,000, meaning you can protect up to $600,000 in equity in your home during bankruptcy. In Texas, the homestead exemption is unlimited, allowing you to protect your entire home equity regardless of the value.

As long as the home is your primary residence, the homestead exemption can be a powerful tool to keep you from losing your home.

Household Goods and Furnishings

Bankruptcy laws also allow you to protect a significant amount of your household goods and furnishings. This includes things like furniture, appliances, electronics, clothing, and other personal belongings used in your day-to-day life.

The federal exemption for household goods is $13,400, and many states have even more generous exemptions.

For example, in Florida, you can exempt up to $1,000 per item, up to a total of $4,000 in household goods. In Illinois, the exemption is $2,400 per debtor.

As long as your household items are reasonably necessary for your or your family’s use, you’ll likely be able to keep them during the bankruptcy process.


Most states also provide a motor vehicle exemption that allows you to protect a certain amount of the value of your car, truck, or other vehicle.

The federal exemption is $4,000, but many states offer higher amounts.

In Arizona, for instance, you can exempt up to $6,000 in vehicle equity. In Michigan, the exemption is $3,525 per debtor.

As long as the vehicle is used for personal, family, or household purposes, you should be able to keep it during your bankruptcy case.

Retirement Accounts

One of the most important bankruptcy exemptions is for retirement accounts.

Federal law allows you to fully exempt your interests in qualified retirement plans, such as 401(k)s, 403(b)s, pensions, and IRAs. This means your retirement savings are usually protected from being liquidated to pay off your debts.

The only exception is that you’re limited to exempting up to $1,512,350 in IRAs and Roth IRAs.

But given that most people don’t have more than $1.5 million in retirement savings, this exemption should cover the majority of people’s nest eggs.


Listing bankruptcy exemptions during chapter 7 bankruptcy


Personal Injury Recoveries

If you’ve been awarded a personal injury settlement or judgment, that money is generally protected from bankruptcy creditors.

The federal exemption for personal injury recoveries is $26,150, and many states offer even higher exemption amounts.

This exemption applies to the compensation you receive for things like pain and suffering, lost wages, and medical expenses related to your injury.

As long as the funds are traceable to the personal injury award, you should be able to keep that money safe during bankruptcy.

Tools of the Trade

If you’re self-employed or work in a skilled trade, you may be able to protect the tools and equipment you need for your job. The federal exemption for “tools of the trade” is $6,825, and many states provide higher exemption amounts.

For example, in New York the exemption is $11,625 per debtor. In California, you can exempt up to $8,725 in tools of the trade.

As long as the items are reasonably necessary for your occupation, you should be able to keep the essential tools and equipment you need to continue working.

Other Exemptions

In addition to the major exemptions we’ve covered, bankruptcy laws also allow you to protect other types of property and assets, including:

  • Cash/bank account balances (typically $300-$1,000 or more per debtor)
  • Life insurance policies
  • Disability benefits
  • Alimony and child support payments
  • Jewelry (often up to $1,500-$2,000 per debtor)
  • Clothing
  • Books and artwork

The specific exemption amounts and types of protected property can vary quite a bit from state to state. That’s why it’s important to familiarize yourself with the bankruptcy exemptions available in your state.

Protecting Your Assets

While the prospect of bankruptcy can be daunting, understanding the various exemptions you may be able to claim can provide a lot of comfort and peace of mind.

By protecting key assets like your home, vehicle, retirement savings, and personal belongings, you can emerge from bankruptcy on a more stable financial footing.

Of course, the bankruptcy process can still be complex, so it’s always a good idea to work with an experienced bankruptcy attorney who can ensure you take full advantage of all the exemptions you’re entitled to.

With the right legal guidance, you can get the fresh start you need without losing everything you’ve worked so hard to achieve.


Learn More

At Blue Bee Bankruptcy, our lawyers are highly experienced in bankruptcy options. More importantly, we understand that each case we receive is unique and each client has different needs and goals. We will discuss these signs with you and decide the best route to take.

Likewise, we strive to help our clients rebuild their lives and take steps toward a better financial future through filing. 


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If you’re dealing with the potential of bankruptcy, give us a call. Our team will work to help you by reviewing all of the options our firm has available. We will ensure you’ll get the best possible outcome for your situation.

Get in touch today so we can start working on either halting bankruptcies or preventing them from taking place altogether!

Contact Us Today For Help! You can schedule your free consultation online or call us at (801) 285-0980.


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