Bankruptcy Exemptions: Which State Exemption System Can You Use?

Find out which set of exemptions you'll be entitled to use to protect your property in bankruptcy.

Updated March 18, 2019

Bankruptcy exemptions are an important part of bankruptcy planning. They determine what property you keep in Chapter 7 bankruptcy and how much you pay to certain creditors through your bankruptcy plan in Chapter 13 bankruptcy. In this article, you’ll learn which state’s bankruptcy exemptions you can use when filing for bankruptcy.

If you aren’t sure which bankruptcy chapter will be best for you, read When Is Chapter 7 Bankruptcy Better Than Chapter 13?

Determining Your Domicile

Which state bankruptcy exemption system you can use will depend on where you have been “domiciled” for a certain period. For this reason, the rules are sometimes referred to as domicile requirements.

For purposes of bankruptcy law, your domicile is where you make your permanent home, and it might be different from where you are living currently. For instance, if your home is in Texas, but you are temporarily living in Massachusetts because of military duty or a work project, your domicile would be Texas, not Massachusetts. You’ll look at where you get mail, vote, and pay taxes.

You’ll find links to all of the state bankruptcy exemptions in Bankruptcy Exemptions—What Do I Keep When I File for Bankruptcy?

Bankruptcy Exemption Domicile Rules

Here are the points you’ll consider when figuring out which state’s exemptions you’ll be entitled to use.

  • If your domicile—where you make your permanent home—has been in your current state for at least two years, use that state’s exemptions (or the federal exemptions if allowed in that state).
  • If you’ve been domiciled in a state for more than 91 days but less than two years, use the exemptions of the state where you were domiciled for the better part of the 180 days prior to the two-year period before you filed for bankruptcy.
  • If you’ve been domiciled in a state for less than 91 days, first figure out where to file for bankruptcy (where you file may be different from which exemptions you can use). File in the state you lived in previously, or, wait until you have lived in your current state for 91 days, then file in that state. Then, use the rule above to figure out what exemptions to use.
  • If your filing state allows you to choose between the state and federal bankruptcy exemptions, you can use the federal bankruptcy exemptions regardless of how long you have been domiciled in that state.
  • If, when you apply these rules, you cannot use any state’s exemption system, you can use the federal bankruptcy exemptions (even if it is not otherwise available in the state where you file).

The Homestead Exemption: Special Domicile Rules

The homestead exemption has a special rule. If you acquired a home in your domicile state within 40 months before filing for bankruptcy, your homestead exemption is capped at $170,350, as of April 1, 2019. The figure changes every three years and is $160,375 for cases filed between April 1, 2016, and March 31, 2019. (11 U.S.C. 522(q).) The cap doesn’t apply if you bought the home with proceeds from the sale of another home within the same state.

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