Exemptions to Chapter 7 Bankruptcy: Homestead

When a debtor files for Chapter 7 bankruptcy, he will submit a list of property he wishes to keep and withhold from the bankruptcy estate. Such property is called an "exemption." The types and amount of exemptions allowed vary according to federal and state law. By far, the most important exemption to most debtors is the homestead exemption. A homestead exemption is the amount of equity in the debtor’s primary residence that he is allowed to keep. The federal bankruptcy homestead exemption is $20,200 for bankruptcies filed after April 1, 2005. However, state homestead exemptions vary greatly. Though states may allow their citizens to use a State, rather than federal, homestead exemption, federal law dictates that a state homestead exemption cannot exceed $125,000 if the home was purchased during the 1,215 days leading up to the bankruptcy filing.

Additionally, though the U.S. Bankruptcy Code allows debtors to choose between the federal or applicable state homestead exemptions, the states were allowed to opt-out of this framework and require their residents to use the state homestead exemption. The current law regarding homestead exemptions in each state is as follows:

HOMESTEAD EXEMPTION AMOUNTS BY STATE

State

State Exemption Amount in Equity

State or Federal Exemption

Alabama

Up to $5,000 and 160 acres

State only

Alaska

Up to $67,500

State or Federal

Arizona

Up to $150,000

State only

Arkansas

Up to $2,500  and 16 acres

State or Federal

California

Varies under two exemption schemes

State only

Colorado

Up to $45,000

State only

Connecticut

$18,450

State or federal

Delaware

Up to $20,200

State only

District of Columbia

Unlimited

D.C or federal

Florida

Can keep property unless more than .5 acre in municipality or 160 acres in rural area

State only

Georgia

Up to $5,000

State only

Hawaii

Up to $20,000/1 acre

Choose from two state schemes

Idaho

Up to $50,000

State only

Illinois

Up to $7,500

State only

Indiana

Up to $7,500

State only

Iowa

Up to $125,000

State only

Kansas

Up to $125,00/160 acres

State only

Kentucky

Up to $5,000

State only

Louisiana

Up to $25,000

State only

Maine

Up to $35,000 or $70,00 if dependents also reside in home

State only

Maryland

Up to $5,000 aggregate with personal property

State only

Massachusetts

Up to $20,200 or $500,000

State or federal

Michigan

Up to $20,200 or $3,500

State or federal

Minnesota

Up to $20,200 or $200,000 ($500,000 if agricultural)

State or federal

Mississippi

Up to $75,000/160 acres

State only

Missouri

Up to $15,000

State only

Montana

Up to $100,000

State only

Nebraska

Up to $12,500/160 acres

State only

Nevada

Up to $350,000

State only

New Hampshire

Up to $100,000

State or federal

New Jersey

Up to $20,200

State or federal

New Mexico

Up to $30,000

State or federal

New York

Up to $50,000

State only

North Carolina

Up to $18,500

State only

North Dakota

Up to $80,000

State only

Ohio

Up to $5,000

State only

Oklahoma

Up to $125,000

State only

Oregon

Up to $30,000

State only

Pennsylvania

Up to $20,200

State or federal

Rhode Island

Up to $200,000

State or federal

South Carolina

Up to $50,000

State only

South Dakota

Up to $30,000/160 acres

State only

Tennessee

Up to $5,000

State only

Texas

Your home

State or federal

Utah

Up to $20,000

State only

Vermont

Up to $75,000

State or federal

Virginia

Up to $5,000

State only

Washington

Up to $40,000

State or federal

West Virginia

Up to $25,000

State only

Wisconsin

Up to $40,000

State or federal

Wyoming

Up to $10,000

State only

For a complete listing of all property exemptions in each state, as well as detailed state residency requirements, contact your local bankruptcy court.


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