What are federal bankruptcy exemptions?
Federal exemptions under 11 U.S.C. §522 include: homestead equity $27,900, vehicle $4,450, household goods $700/item (up to $14,875 total), jewelry $1,875, tools of the trade $2,800, wildcard $1,475 (plus unused homestead exemption up to $13,950), life insurance cash value $14,875, retirement accounts (generally unlimited for ERISA-qualified plans; IRAs up to $1.51 million). About half of states allow debtors to choose between federal and state exemptions — always use whichever set protects more of your assets.
Which states have unlimited homestead exemptions?
Texas, Florida, Iowa, Kansas, Oklahoma, and South Dakota have unlimited homestead exemptions (subject to acreage and residency requirements). This means you can keep a home of any value in bankruptcy if it qualifies. In Texas and Florida specifically, this is a powerful protection — a million-dollar home could be fully exempt. However, these exemptions usually require you to have lived in the state for a specific period (typically 730 days) before filing.
Are retirement accounts protected in bankruptcy?
Generally yes. ERISA-qualified retirement plans (401(k), 403(b), pension plans) are almost entirely protected from creditors in bankruptcy under a 1992 Supreme Court ruling and are excluded from the bankruptcy estate. Traditional and Roth IRAs are protected up to $1.51 million per person (adjusted periodically). SEP-IRAs and SIMPLE IRAs are generally fully protected. State exemptions often provide additional protection. Retirement accounts are typically the last asset you should withdraw before filing.