Federal Nonbankruptcy Exemptions

Federal nonbankruptcy exemptions protect government benefits from creditors who try to collect debts from people who haven't filed for bankruptcy. However, people who file for bankruptcy can also use federal nonbankruptcy exemptions to supplement state exemptions. In this article, you'll learn:

• when to use state and federal exemptions
• the scope of the federal nonbankruptcy exemptions, and
• where to find the exemptions you need.

If you'd like to learn more about potential bankruptcy issues, try our ten-question bankruptcy quiz. It will help you spot tricky bankruptcy concepts you might want to discuss with a bankruptcy lawyer.

What Are Federal Nonbankruptcy Exemptions?

The federal nonbankruptcy exemptions are laws that aren't part of the bankruptcy code that protect government benefits and entitlements from creditors.

When Can You Use Federal Nonbankruptcy Exemptions in Bankruptcy?

If you choose to use your state exemptions to protect property in bankruptcy, you can also use the federal nonbankruptcy exemptions.

What Are the Differences Between Federal and State Bankruptcy Exemptions and Federal Nonbankruptcy Exemptions?

It's easy to confuse federal bankruptcy exemptions, federal nonbankruptcy exemptions, and state bankruptcy exemptions. Each exemption set will protect property in bankruptcy, but you can't pick and choose from all three sets in the same bankruptcy case.

Here's how they work.

Every state has a set of state bankruptcy exemptions, and most states require filers to use the state exemptions. However, some states allow bankruptcy filers to choose between federal and state bankruptcy exemptions. If you live in one of those states, you'll select the set that protects the most property or the property most important to you.

Here is where federal nonbankruptcy exemptions come in. If you choose to use your state's exemptions, you can also use the federal nonbankruptcy exemptions.

This outline is 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 federal nonbankruptcy exemptions.

Determining Whether You Can Use Federal Nonbankruptcy Exemptions

Find out if your state gives you an exemption choice. Next, inventory your property and decide which system will work best. If you choose your state's exemptions, you can use the federal nonbankruptcy exemptions.

Federal Nonbankruptcy Exemption: The Shortlist

Reading law can be dry, and the full federal nonbankruptcy exemption list is no exception—especially given that most things won't apply to you. Because we don't want you to miss essential protections, we've condensed the entries into a "most frequently used" shortlist. You'll find the entire list, including the more targeted programs, at the end of the article.

Don't Miss These Biggies

• Government employees' death and disability benefits (5 USC 8130.)
• Civil service workers' retirement (5 USC 8346(a).)
• Tenancy by the entirety protection available in some jurisdictions (11 USC 522(b)(3)(B).)
• IRS tax-exempt retirement accounts, including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined-benefit plans; traditional and Roth IRAs to $1,512,350 (amount changes April 1, 2025) (11 USC 522(b)(3)(C); (n).)
• COVID-19 recovery rebates (stimulus payments) (11 USC 541(b)(11).)
• 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 USC 1673.)
• ERISA-qualified benefits (29 USC 1056(d).)
• Veterans' benefits (38 USC 5301(a).)
• Social Security benefits (42 USC 407.)

Complete Federal Nonbankruptcy Exemption List

Here's our list of federal nonbankruptcy exemptions. However, because exemptions change, this might not be a complete list. Be sure to verify all exemptions independently. We last updated it on April 21, 2022.

Retirement, Disability, Death, and Survivor Benefits

• Government employees' death and disability benefits (5 USC 8130.)
• Civil service workers' retirement (5 USC 8346(a).)
• Military survivor annuities (10 USC 1450(i).)
• Benefits, annuities, and payments to Foreign Service employee survivors (22 USC 4060.)
• Judges, U.S. court & judicial center directors, administrative assistants to U.S. Supreme Court Chief Justice (28 USC 376(n).)
• ERISA-qualified benefits (29 USC 1056(d).)
• Longshoremen & harbor workers (33 USC § 775; 916.)
• Military Medal of Honor roll pensions (38 USC 1562(c).)
• Veterans' benefits (38 USC 5301(a).)
• Social Security benefits (42 USC 407.)
• War risk, hazard, death, or injury compensation (42 USC § 1701-1717.)
• Public safety officers (42 USC 3796.)
• Railroad workers (45 USC 231m.)
• CIA employees (50 USC 403.)

Other Federal Nonbankruptcy Benefits

• Crop insurance proceeds (7 USC 1509.)
• Military deposits in accounts while on active duty outside the U.S. (10 USC 1035(d).)
• Service member annuities (10 USC 1440.)
• Property recovered by trustee's avoidance (11 USC 522(g).)
• Tenancy by the entirety protection available in some jurisdictions (11 USC 522(b)(3)(B).)
• IRS tax-exempt retirement accounts, including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined-benefit plans; traditional and Roth IRAs to $1,512,350 (for bankruptcy cases filed between April 1, 2022, and March 31, 2025) (11 USC 522(b)(3)(C); (n).)
• COVID-19 recovery rebates (stimulus payments) (11 USC 541(b)(11).)
• 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 USC 1673.)
• Student loan, grant, or work assistance proceeds (20 USC 1095a(d).)
• Sales or lease proceeds of native lands held in trust (25 USC § 410, 412a.)
• General Accounting Office annuities (31 USC 776.)
• Group life insurance and war compensation for veterans (38 USC § 3101(a), 1970(g); 42 § 1717.)
• Railroad workers' unemployment insurance (45 USC 352(e).)
• Seamen's wages (except for spousal and child support) (46 USC 11109(a).)
• Seamen's clothing (46 USC 11110.)
• FEMA benefits exempt from garnishment (44 CFR 206.110(g).)

Find Your State's Bankruptcy Exemptions

We've included links to state exemption laws below, and you'll find more state bankruptcy exemptions here if your state isn't listed.

Navigating Your Bankruptcy Case

Bankruptcy is essentially a qualification process. The laws provide instructions for completing a 50- to 60-page bankruptcy petition, and because the rules apply to every case, you can't skip a step. We want to help.

Below is the bankruptcy form for this topic and other resources we think you'll enjoy. For more easy-to-understand articles, go to TheBankruptcySite.

We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.

Updated October 7, 2022