Understanding the Federal Bankruptcy Homestead Exemption Limits

When preparing for bankruptcy, you need to understand the federal bankruptcy homestead exemption limits. This is the first step in determining how much of your home’s value you can actually protect.

In a prior post, I discussed the 1,215-day rule, which is the federal “cap” that prevents new residents from shielding hundreds of thousands of dollars in equity in their homes.

But what if you live in a state where the exemptions offer minimal protection for your home’s equity? Then you need to confirm if your state allows federal exemptions. This is where the Federal Bankruptcy Exemptions found in 11 U.S.C. § 522(d) come into play.

As of the April 2025 adjustments, for any case filed in 2026, the individual homestead exemption stands at $31,575.

By Alexander Hernandez, J.D., Professor, and Author of Consumer Bankruptcy Law (Routledge).

Key Takeaways: The Federal Bankruptcy Homestead Exemption

• The 2026 Federal Homestead Limit: Under the updated 2025–2028 adjustments, the federal homestead exemption is $31,575. For married couples filing jointly, this doubles to $63,150.
• State-Specific Availability: You can only use these federal numbers if your state allows it. Some “Opt-Out” states like Florida, require you to use state law, while others give you the freedom to pick the federal exemptions if it offers better protection for your specific assets.
• Exemption vs. Cap: Remember, the $31,575 federal exemption is what you are given to protect your home under federal law. The $214,000 federal cap is a limit placed on state laws if you are a new resident.
• The Power of the Wildcard: One of the biggest perks of the federal system is the Wildcard Exemption. In 2026, you can protect $1,675 plus up to $15,800 of any unused homestead equity, allowing you to protect your personal property.

What is the Federal Homestead Exemption?

The Federal Bankruptcy Homestead Exemptions are found in 11 U.S.C. § 522(d). Unlike states like Florida or Texas, which have “unlimited” homestead exemptions subject to the caps based on residency, the Bankruptcy Code provides a specific, fixed dollar amount.

As of the April 2025 adjustments, for any case filed in 2026, the Federal Homestead Exemption is $31,575.

If you are a married couple filing jointly, you can double that amount, protecting up to $63,150 in equity. For an average homeowner in a state with “low” homestead protections, the federal bankruptcy exemptions are often the most reliable way to save a home from being sold by a trustee.

When Can You Use the Federal Exemptions?

You can’t always choose between state and federal laws. It depends on where you live:

Choice States: Some states, like New York, Texas, and Pennsylvania, allow you to choose either the state exemption or the federal exemptions. You have to pick one and stick to it. You cannot mix and match.

Opt-Out States: Many states, like Florida and Georgia, have “opted out” of the federal system, which means you would use your state’s exemptions unless you haven’t lived there long enough to qualify.

Don’t Confuse the Homestead Exemption with the Federal Cap

This is the most common point of confusion for debtors is when to apply which exemption.

 The Federal Homestead Exemption ($31,575) is the amount of equity you are allowed to keep if you choose the federal exemption, and it is allowed by your state.

The 1,215-Day Cap ($214,000) is the maximum limit placed on a state’s exemption if you haven’t lived in your state long enough.

Therefore, the $31,575 exemption is what you get to keep if you use federal law. The $214,000 cap is the most you can keep if you use the state law and moved recently.

The “Wildcard” Advantage

Some states have what is known as the “wildcard,” which means the exemptions may change if certain conditions are met. For example, Florida’s wildcard exemption changes if the debtor doesn’t own a home. In Florida, as a homeowner, the personal property exemption is $1,000; however, if the debtor isn’t claiming a home, the exemption increases to $4,000. The federal exemption also offers a wildcard.

The federal wildcard is $1,675; however, you can use up to $15,800 of any unused homestead exemption. If your home has minimal equity, this allows you to protect cash, stocks, or other property that might not usually be protected.

My follow-up post to this series will compare the federal cap versus the federal exemption to clear up any confusion, and you can better understand which one applies to your situation.

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 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.

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Please note that the information on this site does not constitute legal advice and should be considered for informational purposes only.