Federal Nonbankruptcy Exemptions

Federal nonbankruptcy exemptions are federal laws—separate from the Bankruptcy Code—that protect certain government benefits and entitlements from creditors, whether or not you’ve filed for bankruptcy. If you file for bankruptcy and use your state’s exemptions, you can claim the federal nonbankruptcy exemptions on top of them. But if your state lets you choose the federal bankruptcy exemptions instead of the state exemptions, and you make that choice, you can’t also claim the federal nonbankruptcy exemptions.

Federal Nonbankruptcy Exemption: The Shortlist

Most filers only need to know a handful of federal nonbankruptcy exemptions—the ones below cover the property people ask about most. Reading the full statutory list is dry, and most of the entries won’t apply to you, so we’ve condensed the most frequently used protections here. You’ll find the entire list, including the more targeted programs, further down the page.

Don’t Miss These Biggies

• Government employees’ death and disability benefits (5 U.S.C. § 8130.)
• Civil service workers’ retirement (5 U.S.C. § 8346(a).)
• Earnings – a minimum of 75% of disposable weekly earnings or 30 times the federal minimum hourly wage, whichever is more. A bankruptcy judge can authorize more for low-income debtors. (15 U.S.C. § 1673.)
• ERISA-qualified benefits (29 U.S.C. § 1056(d).)
• Veterans’ benefits (38 U.S.C. § 5301(a).)
• Social Security benefits (42 U.S.C. § 407.)

How Federal Nonbankruptcy Exemptions Differ From Federal and State Bankruptcy Exemptions

Federal nonbankruptcy exemptions are a separate, third set of protections you can layer on top of your state exemptions—you can’t mix and match all three exemption systems in the same case. Each state has its own set of state bankruptcy exemptions, and most states require filers to use them. Some states, however, let filers choose between their state exemptions and the federal bankruptcy exemptions instead. If you live in one of those states, you’ll want to pick whichever set protects the most property, or the property that matters most to you.

This is where the federal nonbankruptcy exemptions come in: If you choose to use your state’s exemptions, you can also claim the federal nonbankruptcy exemptions. If you choose the federal bankruptcy exemptions instead, you can’t.

Here’s a short recap of how the three types of exemptions work together:

• Each state has its own set of exemption laws.
• Some states let you use the federal bankruptcy exemptions instead of the state exemptions.
• If you choose your state exemptions, you can also use the federal nonbankruptcy exemptions.

How to Determine Whether You Can Use Federal Nonbankruptcy Exemptions

Start by finding out whether your state gives you a choice between the state and federal bankruptcy exemptions. Next, inventory your property and decide which system protects it best. If you choose your state’s exemptions, you can add the federal nonbankruptcy exemptions to your list.

Complete Federal Nonbankruptcy Exemption List

Because exemptions change, this list might not be complete. Verify all exemptions independently before using or seek help from a local bankruptcy lawyer.

Retirement, Disability, Death, and Survivor Benefits

• Government employees’ death and disability benefits (5 U.S.C. § 8130.)
• Civil service workers’ retirement (5 U.S.C. § 8346(a).)
• Military survivor annuities (10 U.S.C. § 1450(i).)
• Benefits, annuities, and payments to Foreign Service employee survivors (22 U.S.C. § 4060.)
• Judges, U.S. court and judicial center directors, administrative assistants to U.S. Supreme Court Chief Justice (28 U.S.C. § 376(n).)
• ERISA-qualified benefits (29 U.S.C. § 1056(d).)
• Longshoremen and harbor workers (33 U.S.C. §§ 775; 916.)
• Military Medal of Honor roll pensions (38 U.S.C. § 1562(c).)
• Veterans’ benefits (38 U.S.C. § 5301(a).)
• Social Security benefits (42 U.S.C. § 407.)
• War risk, hazard, death, or injury compensation (42 U.S.C. §§ 1701-1717.)
• Public safety officers (34 U.S.C. § 10281.)
• Railroad workers (45 U.S.C. § 231m.)
• CIA employees (50 U.S.C. § 2094.)

Other Federal Nonbankruptcy Benefits

• Crop insurance proceeds (7 U.S.C. § 1509.)
• Military deposits in accounts while on active duty outside the U.S. (10 U.S.C. § 1035(d).)
• Service member annuities (10 U.S.C. § 1440.)
• Property recovered by trustee’s avoidance (11 U.S.C. § 522(g).)
• Student loan, grant, or work assistance proceeds (20 U.S.C. § 1095a(d).)
• Sales or lease proceeds of native lands held in trust (25 U.S.C. §§ 410, 412a.)
• Government Accountability Office annuities (31 U.S.C. § 776.)
• Group life insurance and war compensation for veterans (38 U.S.C. §§ 5301(a), 1970(g); 42 U.S.C. § 1717.)
• Railroad workers’ unemployment insurance (45 U.S.C. § 352(e).)
• Seamen’s wages (except for spousal and child support) (46 U.S.C. § 11109(a).)
• Seamen’s clothing (46 U.S.C. § 11110.)
• FEMA benefits exempt from garnishment (44 C.F.R. § 206.110(g).)

Find Your State’s Bankruptcy Exemptions

Use the table below to jump straight to your state’s bankruptcy exemption laws and see how they interact with the federal nonbankruptcy exemptions above.

Getting Help With Your Bankruptcy Case

Bankruptcy is essentially a qualification process, and figuring out which exemptions apply to your property is one of the trickiest parts. A bankruptcy lawyer can help you sort through your state, federal, and federal nonbankruptcy options so you keep as much property as the law allows. In the meantime, here are more easy-to-understand articles for your next read:

• How Chapter 7 Bankruptcy Works
• Chapter 13 Bankruptcy - Comprehensive Guide
• Federal Bankruptcy Exemptions
• What Happens to Your Property in Bankruptcy?