ABA Family Legal Guide

Consumer Bankruptcy

Straight Bankruptcy: Chapter 7

Chapter 7 Defined

Do exemptions vary much between states?

Yes. Asset exemptions vary widely from state to state. For example, variations among the states are found with respect to a broad array of exempt assets such as cars, jewelry, household furnishings, books.

Home exemptions also vary by state. Florida has no dollar cap on homestead exemptions and allows a homestead exemption that protects a debtor's home and property so long as the size of that property does not exceed half an acre in a municipality or 160 acres elsewhere. In Georgia, in contrast, the homestead exemption is limited to $5,000.

The current federal bankruptcy law makes it harder to shield money, even in those states with high homestead exemptions. The law establishes that, regardless of state law, debtors may exempt no more than $125,000 of interest in a homestead that was purchased within 40 months of a bankruptcy filing. Another limitation is that a person must live in a state for two years before they can claim that particular state's favorable exemptions. However, you may still shelter more than $125,000 (if state law permits) if you bought your home (or a prior home) in the same state more than 40 months before filing.