Navigating Schedule C Exemptions in Bankruptcy
Professor’s Corner
By Alexander Hernandez, J.D., Professor, and Author of Consumer Bankruptcy Law (Routledge).
Updated on October 1, 2025.
Welcome to the latest installment of our series on navigating the bankruptcy petition. This post focuses on Schedule C, where you claim exemptions for your personal property. Understanding this section is crucial, as it determines which assets you can keep.
Listen to this podcast.
Understanding Schedule C and State vs. Federal Exemptions
Schedule C: The Property You Claim as Exempt (individuals) is where you list all your personal property and claim whether it is exempt or not. The concept of “exempt” simply means “protected” from being sold by the bankruptcy trustee to pay your creditors.
A critical point to remember is that exemptions vary significantly from one state to another. You must determine whether your state uses its own exemptions or allows you to choose between state and federal exemptions.
Under the Bankruptcy Code (specifically the Bankruptcy Abuse Prevention and Consumer Protection Act), states can opt to use their own exemption laws. A few states permit debtors to choose between federal and state exemptions, but you must select one set of laws for all your exemptions; you cannot mix and match.
A Warning About Outdated Information
When researching exemptions, be extremely cautious about the information you find online. Many websites, even well-known legal resources, have outdated exemption values. Always double-check your sources. On my blog, I make a point to list the specific statutes that apply to exemptions in each state, ensuring the information is as current as possible. You can find the latest exemptions at the end of this blog post.
When completing your bankruptcy forms, you must ensure that the information on Schedule C is consistent with what you reported on Schedule A/B (the list of your assets). A discrepancy in values, for example, listing an item at $100 on one form and $50 on another, will raise red flags with the trustee and lead to more questions.
This is a common mistake, and even bankruptcy software doesn’t always automatically update values across all forms. If you’re filling out the forms manually, please make sure to change the values in both places.
It’s a common misconception that if you want to keep an asset, you shouldn’t list it in your bankruptcy petition. This is incorrect. You must list all of your assets on Schedule A/B, even those you intend to keep. The proper procedure is to list the asset and then, on Schedule C, claim it as exempt according to your state’s laws.
Also, note that the homestead exemption that you claim for property tax purposes is different from the bankruptcy homestead exemption that protects the equity. This is a potential issue if you claim your home as exempt but are not actually living in it (e.g., you are renting it out to someone else). This could jeopardize your ability to protect the property in bankruptcy.
Relocation and Exemptions: What You Need to Know
If you have recently moved, your residency status can impact which state’s exemptions you can use. You may be required to use the exemptions from your previous state, or you may have to wait a certain period to claim the exemptions of your new state. This is an important factor to consider when planning to file for bankruptcy, since you have to determine which state’s exemptions are more beneficial to you.
When it comes to listing the value of your personal property, you should use “garage sale value” or “fair market value.” This is not the original purchase price or a replacement cost. It’s what you would reasonably expect to get for the item if you sold it at a garage sale or on a site like Craigslist. Trustees are not typically interested in your used furniture, but they will scrutinize items of higher value like jewelry, cars, and tax returns.
Make sure to copy every asset from Schedule A/B to Schedule C, and double-check all your numbers. Reviewing the Summary of Assets form can help catch simple errors, like a misplaced zero, that can significantly alter your petition.
You can learn more about filing for bankruptcy and the bankruptcy petition via this link. Information on the bankruptcy court system, contact information for trustees, and your state’s exemptions can be found here. The federal bankruptcy exemptions are listed here. The latest version of the 341 Meeting of the Creditors can be found here.
Professor Hernandez is an attorney specializing in consumer finance and debt relief. He is the published author of Consumer Bankruptcy Law (Routledge Publishing) and teaches law and finance courses in both English and Spanish for an international university.
You can find additional categories by clicking below or by using the search feature at the top of this page:
Colleges and universities can purchase my bankruptcy law textbook directly from Routledge Publishing. Paralegals and students who are buying single copies can do so via Amazon Books. To access my YouTube channel, click this link. You can also listen to my podcast on Spotify.
Please note that the information on this site does not constitute legal advice and should be considered for informational purposes only.
Updated initially on August 30, 2025.
Discover more from Bankruptcy.Blog
Subscribe to get the latest posts sent to your email.