Guide To Bankruptcy Exemptions: What Can You Keep When You File Chapter 7?

Filing for Chapter 7 bankruptcy can feel overwhelming, especially if you’re worried about losing your home, car, or the things you use every day. But here’s the good news: Most people who file get to keep all of their property.

That’s thanks to bankruptcy exemptions. These laws protect the essentials you need to live and work, like your car, clothes, furniture, and even some savings.

This guide explains how Chapter 7 exemptions work, what you can protect, and how to make the most of these protections in your case.

What Are Bankruptcy Exemptions?

Bankruptcy exemptions are laws that protect your property during a bankruptcy filing.

🛡️ Think of exemptions as a legal shield. When you file for bankruptcy, you’ll list all your property on your bankruptcy forms. Then you’ll claim the exemptions that apply. If the property you list is fully protected by an exemption, you can keep it.

Exemptions don’t just apply to physical items. They also cover things like:

• Social Security and unemployment benefits

• Retirement savings

• Alimony and child support

• Personal injury compensation

📌 Exemptions work differently in Chapter 13, which involves a repayment plan. This article focuses on Chapter 7. You can learn more about Chapter 13 exemptions in the FAQ section near the bottom of this article.

We’ll get into the specifics more later, but you may not need to do a deep dive if you decide to file your bankruptcy using Upsolve’s free filing tool. The tool walks you through the whole bankruptcy process step by step and includes information and guides to educate you along the way.

Upsolve is a nonprofit, so our services are 100% free, and our users love us.

Why Bankruptcy Exemptions Exist

Bankruptcy exemptions are there to make sure you can rebuild your life after filing. They protect the things you need to survive — your home, your car, your clothes, and your tools or equipment if you work for yourself. 

Without exemptions, filing bankruptcy could leave people homeless, jobless, and unable to care for their families. That would defeat the purpose of giving someone a financial fresh start.

The bankruptcy system is meant to help people recover, not to punish them. Exemptions are a big part of that. They keep you from losing everything just because you fell behind on debt. 

By protecting your basic property, these laws help you get through bankruptcy and come out on the other side ready to move forward.

Do Most People Lose Property in Chapter 7?

No — the vast majority of people who file Chapter 7 don’t lose any of their property. 

💡 In fact, about 95% of Chapter 7 cases are considered “no-asset” cases. This means everything the filer owns is protected by exemptions, so the bankruptcy trustee doesn’t sell any of it.

👉 The bankruptcy trustee is the person appointed to manage your case and make sure any non-exempt property is used to pay back your creditors.

If your belongings are fully covered by the exemptions you claim, the trustee will file a report saying there are no assets to distribute to creditors. From that point on, your case continues without any risk of losing property.

Even if you own something that’s worth slightly more than the exemption allows, many trustees won’t go through the trouble of selling it unless they know it will bring in meaningful money for creditors. That’s especially true if it would be expensive or time-consuming to sell.

This is why it’s so important to understand and properly claim your exemptions. When you do, there’s a good chance you’ll be able to erase your debts and keep everything you own.

How To Claim Bankruptcy Exemptions

To protect your property in Chapter 7 bankruptcy, you need to list the exemptions on your Schedule C form. 

📄 Schedule C is part of the paperwork you file with the bankruptcy court. It’s a form where you officially claim what property you want to protect.

As a general overview, it’s important to know that each item you want to protect needs to be:

• Listed by name and description (e.g., “2016 Ford F-150 truck”)

• Assigned a current value, usually market value for things like a car or garage sale pricing for household goods and personal items

• Matched with an exemption amount that covers that value (in full or part)

• Linked to a legal exemption code, like 11 U.S.C. § 522(d)(2)

To fill this out correctly, you’ll also use Schedule A/B, which is where you list everything you own. The values and descriptions on both forms should match. 

💡 Many bankruptcy filers use Schedule A/B like a checklist to make sure they don’t miss anything on Schedule C.

If you’re feeling overwhelmed reading about all these forms, don’t worry! Help is available.

While it may not feel like it, you don’t need to be a legal expert to fill out the exemption forms. But you do need to be thorough and accurate. And here’s the great news: If you’re using Upsolve’s free filing tool, you’ll be guided through the process step by step.

If you’re not sure how to apply exemptions or you’re worried about property that isn’t fully covered, you may want to connect with a bankruptcy attorney. Many attorneys offer free consultations and can help you understand how the exemptions apply to your situation.

What Happens if You Don’t Claim Exemptions?

If you forget to claim an exemption — or don’t fill out Schedule C at all — the trustee can treat your property as unprotected.

If something you own isn’t listed as exempt, the trustee may take it, sell it, and use the money to repay your unsecured creditors.

What if You Accidentally Leave Something Out of Schedule C?

In most cases, if you accidentally miss something but overall made a good faith effort to include all your belongings on the form, the trustee might allow you to fix the mistake. 

You can usually file an amended Schedule C to add or correct an exemption. But if you leave Schedule C blank or clearly skip key items, the trustee isn’t required to give you a second chance.

That’s why it’s so important to take your time when filling out your bankruptcy petition forms. Anything you want to keep should be clearly listed and properly claimed as exempt.

Federal vs. State Bankruptcy Exemptions

There are two main sets of bankruptcy exemptions: federal exemptions and state exemptions. 

Both are designed to protect your property, but they come from different places in the law. 

⚠️ When you file for Chapter 7, you can’t mix and match between the two. You have to choose one system: either the federal exemptions or your state’s exemptions, depending on what your state allows.

Some states require you to use their state-specific exemptions. These are often called opt-out states because they’ve opted out of the federal exemption system. 

Other states let you choose the federal exemptions if they protect more of your important property. 

How To Know Which Exemptions You Can Use

Not everyone gets to choose between federal and state bankruptcy exemptions. Whether you have a choice depends on your state’s laws and your residency history.

Here’s how to figure it out:

• If your state is an opt-out state, you’ll have to use your state’s exemption list — even if the federal exemptions would protect more of your property.

• If your state allows you to choose, you can look at both the state and federal lists and decide which one gives you the best protection.

• If you’ve moved recently, things get a little more complicated. 

  • To use your current state’s exemptions, you need to have lived there for at least 730 days (two full years) before filing. 

  • If you haven’t, the court will look at where you lived for most of the six months before the two-year period started to determine which state’s exemptions apply.

📌 Some people who use their state’s exemptions may qualify for special federal non-bankruptcy protections. Learn more in the FAQ section below.

If you aren’t sure about what applies in your case, it may be helpful to get a free consultation with a bankruptcy attorney before you file. This is especially true if you’ve moved across state lines. 

Federal Bankruptcy Exemptions (Updated for 2025)

The federal bankruptcy exemptions protect many of the everyday things you need to live and work, including your home equity, car, household items, retirement accounts, and certain benefits.

These amounts are set by law and adjusted every three years to keep up with inflation. The most recent update took effect on April 1, 2025.

💡 These exemptions apply to your equity, which is the value of the item minus any loans you still owe on it. 

For example, if your car is worth $7,000, and you owe $3,000 on it, your equity is $4,000. This would be fully protected under the federal motor vehicle exemption of $5,025.

Wildcard Exemption

The wildcard exemption gives you added flexibility. You can use it to protect:

• Property that isn’t covered by another category

• Property that’s only partially covered (to “top off” an exemption)

• Cash, bank balances, or personal keepsakes

In 2025, the federal wildcard exemption lets you protect:

• $1,675 on its own

• Up to $15,800 of any unused portion of your homestead exemption

That’s a potential total of $17,475 in wildcard protection. For many filers, this is often enough to fully protect extra items that don’t fit neatly into other categories.

Money, Accounts, & Benefit Protections

The federal exemptions also protect many types of financial and legal benefits. The following are fully protected:

• Social Security, VA benefits, public assistance, and unemployment 

• Alimony and child support 

• Wrongful death, future earnings, and crime victim compensation

• Disability or illness-related payments 

Life insurance bankruptcy protection may be only partially protected in some circumstances.

The following are protected up to the listed amount:

• IRAs and Roth IRAs up to $1,711,975

• Personal injury awards up to $31,575 (excluding pain/suffering and financial loss)

What Happens to Non-Exempt Property in Chapter 7 Bankruptcy?

If you own something that isn’t fully protected by an exemption, like a second vehicle or a valuable collectible, it may not be safe in your case. 

The bankruptcy trustee — the person assigned to oversee your case and handle any non-exempt assets or property — may be allowed to sell that item and use the money to repay your creditors. Many people also wonder about keeping a checking account during bankruptcy, which has special considerations.

💡 Remember, most people who file Chapter 7 don’t lose anything. But when property isn’t exempt, here are the most common outcomes:

• You may be able to buy it back. If the trustee thinks it’s easier and more cost-effective, they might let you pay the non-exempt value yourself. For example, if something is worth $6,000 and only $5,000 is protected, you might be able to pay the $1,000 difference to keep it.

• The trustee might not sell it. If the item is hard to sell or wouldn’t bring in much money, the trustee can decide it’s not worth pursuing. In that case, you may still get to keep it.

Common Questions About What You Can Keep in Chapter 7

Here are some of the most frequently asked questions about bankruptcy exemptions and what you can keep when you file.

How Do Exemptions Work in a Chapter 13 Bankruptcy?

Exemptions matter in Chapter 13 bankruptcy, but in a different way than in Chapter 7. In Chapter 13, you usually keep all your property, even non-exempt items. It also allows you to catch up on secured debt like a mortgage or car loan.

Instead of selling your stuff, you make monthly payments through a court-approved repayment plan. These usually last 3–5 years. And the amount you repay is partly based on how much non-exempt property you have.

⚠️ Chapter 13 cases are complicated. If you're looking for debt relief through Chapter 13, it’s a good idea to get legal advice from a qualified bankruptcy lawyer. Though you can file Chapter 13 without a lawyer, success rates are very low. Upsolve can help connect you with a qualified attorney near you for a free consultation.

What Are Federal Non-bankruptcy Exemptions?

Federal non-bankruptcy exemptions are legal protections that come from other parts of federal law — not the Bankruptcy Code. 

They protect certain benefits or income from creditors, even if you’re not in bankruptcy. But if you are filing Chapter 7, they can also give you extra protection, as long as you’re using your state’s exemptions (not the federal ones).

Some benefits, like Social Security or VA payments, are protected under both federal bankruptcy law and non-bankruptcy law. But these non-bankruptcy protections may go further, especially if your state’s exemption laws don’t fully protect certain benefits or accounts.

Who Qualifies for Federal Non-bankruptcy Exemptions and What Do They Cover?

Federal non-bankruptcy exemptions are designed for people connected to specific federal systems or types of work. 

You might qualify if you are or were:

• A veteran

• A railroad worker

• A military service member

• A civilian or federal employee

• A seaman or harbor worker

• Someone receiving federal retirement or disability benefits

If you qualify, these exemptions can protect things like:

• Social Security benefits

• VA disability and retirement benefits

• Military group life insurance

• Deposits made to military savings accounts while stationed abroad

• Railroad retirement and unemployment benefits

• Seamen’s wages and clothing

• Indian lands and tribal income

• Survivors benefits for lighthouse workers and federal judges’ dependents

Many of these protections are unlimited, meaning they apply no matter how much the benefit is worth.

Can I Double Exemptions if I’m Married?

Sometimes. If you’re a married couple filing jointly, you may be able to double certain exemption amounts, but only if both spouses legally own the property in question.

For example, if you and your spouse jointly own a car, and your state (or the federal exemption system) allows a $5,000 vehicle exemption per filer, you may be able to protect up to $10,000 in car equity. 

Not every exemption can be doubled, and it depends on the exemption laws you’re using.

⚠️ Upsolve currently doesn’t support joint bankruptcy filings. If you and your spouse are filing together, you may want to speak with a bankruptcy attorney to understand your options.

How Do I Choose Between Federal and State Exemptions?

If your state gives you the option, you can choose between using the federal bankruptcy exemptions or your state’s exemptions, but not both. To decide which one is better for you, start by thinking about what property you need to protect.

Make a list of your key assets. This usually includes things like:

• Home equity

• Vehicle value

• Personal property (furniture, jewelry, cash, etc.)

• Retirement accounts

• Insurance benefits or payouts

Then, check which exemption set offers better protection for the things you care about most. For example:

• Some states offer higher homestead exemptions (helpful if you own a home with equity).

• The federal system has a generous wildcard exemption, which can protect cash, savings, or anything not covered elsewhere.

Also, if you’re using state exemptions, you might qualify for extra protection under federal non-bankruptcy exemptions (like Social Security or veterans benefits).

Upsolve has articles on the exemptions in every state.

Let’s Summarize…

Filing for Chapter 7 bankruptcy doesn’t mean giving up everything you own. Thanks to bankruptcy exemptions, most people who file keep all of their property, including their car, household items, and personal belongings.

The key is understanding what exemptions apply to your situation and making sure you list and claim them correctly. Whether you use federal or state exemptions, the goal is the same: to protect the things you need to move forward.

If you’re not sure which exemptions apply or you’re worried about losing something important, you’re not alone. Many people in your shoes choose to talk to a bankruptcy attorney for a free consultation, or use Upsolve’s free filing tool to get step-by-step help through the process.

No matter how overwhelmed you may feel now, there’s a way forward — and you don’t have to go through it alone.