Table of Contents
- How State Exemptions Differ: Keeping Your Home, Car, and Other Assets
- What Are Bankruptcy Exemptions?
- Federal vs. State Exemption Systems
- Federal Exemptions (Available in Some States)
- State Exemptions (Vary Widely)
- Choosing the Right Exemptions
- How Exemptions Impact Your Bankruptcy Outcome
- Why You Need Local Legal Guidance
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Navigating bankruptcy can be daunting, especially when it comes to understanding state exemptions and protecting your assets like your home and car. This blog post will clarify how bankruptcy exemptions work, highlighting the differences between federal and state rules, and the importance of consulting with a bankruptcy attorney near you to safeguard your financial future.
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Learn how bankruptcy exemptions differ by state and what assets you can keep, such as your home and car, during bankruptcy. Discover the importance of working with a bankruptcy attorney near you to maximize your protections and navigate the complex exemption laws.
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Flat vector illustration of state bankruptcy exemptions with icons representing exempt assets like a home, car, tools, and savings, placed on a U.S. map showing variation in state exemption rules.
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Mar 30, 2025 06:18 PM
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How State Exemptions Differ: Keeping Your Home, Car, and Other Assets
When considering bankruptcy, one of the most common questions people ask is: “Will I lose everything?” The reassuring answer is no—thanks to bankruptcy exemptions, you may be able to keep your home, vehicle, retirement savings, and more. But here’s the catch: exemptions vary significantly by state.
In this post, we’ll explain how federal and state exemption laws work, why your location matters, and how a bankruptcy attorney near you can help you protect the assets that matter most.
💡 For every post in this series, scroll down to “Related Posts.”
What Are Bankruptcy Exemptions?
Exemptions are laws that protect certain types of property from being taken by a bankruptcy trustee. In Chapter 7 bankruptcy, exemptions determine what assets you can keep from liquidation. In Chapter 13, exemptions influence how much you must repay creditors through your plan.
Common types of exempt property include:
- A portion of your home equity (homestead exemption)
- One or more motor vehicles
- Personal belongings like clothing or furniture
- Tools of your trade
- Retirement accounts and pensions
Federal vs. State Exemption Systems
There are two main types of exemption systems: federal and state. Some states allow you to choose between the two; others require you to use the state’s exemptions only.
Federal Exemptions (Available in Some States)
The federal exemption scheme includes:
- Homestead exemption: ~$27,900 of home equity (as of 2024)
- Vehicle exemption: ~$4,450
- Household goods: ~$14,875
- Wildcard exemption: ~$1,475 plus part of unused homestead
State Exemptions (Vary Widely)
Each state creates its own list of protected property. Here’s how some states compare:
- Florida: Offers unlimited homestead exemption (as long as the home is under a half-acre in a city or 160 acres elsewhere).
- Texas: Also has unlimited homestead protection and generous vehicle exemptions.
- California: Offers two systems (703 and 704 series)—one better for homeowners, the other for renters.
- New York: Homestead exemption varies by county ($89,975–179,950).
- Arizona: Allows ~$400,000 in home equity protection but has strict rules on retirement funds.
Choosing the Right Exemptions
If your state lets you choose between federal and state exemptions, a bankruptcy lawyer near you can help assess which protects more of your assets. Homeowners often prefer state exemptions, while renters or those without home equity may benefit more from the federal wildcard exemption.
How Exemptions Impact Your Bankruptcy Outcome
- In Chapter 7, anything not covered by an exemption may be sold to repay creditors.
- In Chapter 13, exemptions help determine the minimum amount you must repay unsecured creditors.
Proper use of exemptions can mean the difference between keeping your house and car—or losing them. It’s a critical step in building a bankruptcy strategy that protects your future.
Why You Need Local Legal Guidance
Because exemption laws differ so much from one state to another, working with a bankruptcy attorney near you is crucial. They know the rules in your jurisdiction and can ensure you maximize what you keep.
ReferU.AI matches you with an experienced local bankruptcy lawyer who understands your state’s exemption laws and helps you preserve your assets during the bankruptcy process. Don’t risk losing what you’ve worked hard to build—get matched with a trusted attorney near you today.
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