Federal Bankruptcy Exemptions Explained

Not all states allow you to use federal bankruptcy exemptions set. If you are living in a state that allows it, you can replace the state exemptions with the federal set of exemptions. In other states, where it is not allowed, you can only use federal supplemental exemptions in conjunction with the state exemptions. Following is a list of exemptions allowed as per federal laws. For , you can click .


The properties that come under this category include residential homes, real properties, co-op, mobile home, and even burial plot. The maximum value of homestead exemption is $20000. The laws also allow you to use any unused portion (up to a maximum value of $10,125) of this exemption as a wildcard, which means you can exempt that much value of assets in addition to the exemption limit allowed for those assets.

Personal Property

Personal properties that you can keep under federal bankruptcy exemptions include 100% of health aids, jewelry up to $1350, and motor vehicles up to the value of $3,225. Other personal properties (crops, animals, musical instruments, books, clothing, furnishings, appliances, and other household goods) can be exempted up to the value of $10,775 (but the maximum exemption limit for each item must not exceed $525). Compensation for personal injury may also be exempted up to $20200, but it cannot include the amount of money you receive as a compensation for pain and suffering and pecuniary loss. Payments for lost earnings are also exempted in full. Besides that, if you are receiving any compensation for the wrongful death of a person who you were depended on, that is allowed to be exempted 100%.

Tools Of Your Trade

You can also keep tools of your trade, but only up to the total value of $2025. The assets in this category may include books, tools, and implements.

Public Benefits

As per federal bankruptcy exemptions, certain types of public benefits are exempted in full. Those benefits include crime victim compensation, veteran’s benefits, unemployment compensation benefits, social security benefits, and public assistance benefits. Any amount of money you receive as part of these benefits is completely safe; your bankruptcy trustee cannot touch this money to pay to your creditors.


If you are receiving life insurance payments resulting from a policy that was taken in the name of a person who you were depended on, you can get those payments exempted, but only that much money that is needed for support. 100% exemptions are allowed for illness, disability, and unemployment benefits. Life insurance policies (excluding credit insurance policies) that are not matured may also be exempted for full value. Besides that, you can also keep any payment from a life insurance policy that has some loan value in terms of accrued interest or dividends – the maximum limit is $10,755.


As per federal bankruptcy exemptions, IRAs and Roth IRAs are exemptible up to a maximum value of $1,095,000 per individual. However, Tax exempt retirement accounts must be exempted in full value. Such retirement accounts may include defined-benefit plans, SEP and SIMPLE IRAs, money purchase and profit-sharing plans, 403(b)s, and 401(k)s. All ERISA-qualified benefits also come under this category, but only up to the value that is needed for support.


No exemptions are allowed for wages.


Any amount of money that you are receiving as child support or spousal support (alimony) is also allowed to be exempted, but only up to the amount of money that is necessary for support.

Wild Card

You can get additional exemption for any property or assets of your choice up to the maximum value of $1075. Besides that, federal bankruptcy exemptions also allow you to use unused portion (if any) of homestead exemptions to exempt any other property – maximum limit is $10,125.

For married Couple

All of the above exemptions can be just doubled in case a married couple has jointly filed the bankruptcy petition.

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One Response to “Federal Bankruptcy Exemptions Explained”

  1. Sams says:

    Federal bankrupt exemptions can be applied only in selected states otherwise you can combine Federal supplement exemption with your state exemptions. If you are living in a state where you are liable to get Federal exemptions it can prove to be very beneficial for you. The home stead exempt your residential homes, properties etc, the unused portion of this exemption can be combine with any other assets. Your jewellery can be exempted up to certain limits and health aids will be exempted 100 %. If you are survivor of any person the allowances will be 100 % exempted. If you have some specific tools of your profession, the tools can be exempted for a specific value. A person suffering from the complications of Bankruptcy can feel a sign of relief with Federal exemptions. There is 100 % exemption in case of public benefits like unemployment compensation. Life insurance policies can also be exempted 100 %. There are some miscellaneous options also there which can be used for getting exemption. If you are a married couple, you have filed a petition under chapter 7 bankruptcy; your exemptions will be just doubled. The article has all the important facts need to get the Federal exemptions.

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