• In times of financial hardship, many consumers look to filing for bankruptcy protection to keep from losing their savings and property. Chapter 7 bankruptcy allows filers to discharge a majority of their debts while still retaining items that they own. Federal guidelines for exempt property in a Chapter 7 case are available, and depending on the state, may be used instead of state guidelines.
  
  

Homestead

• The Homestead exemption applies to real property owned by the filer, including homes, mobile homes and co-ops. Burial plots that have been purchased in advance also fall under the exemption. As of 2010, up to $20,200 in equity is exempt from seizure by the trustee under the Homestead exemption. If the entire exemption is not used, up to $10,125 may be used to cover other types of property.
  
  

Personal Property

• The exemptions for personal property apply to items that the filer may own for personal use such as automobiles and household items. Personal property exemptions include up to $3,225 in equity for a motor vehicle, jewelry valued at up to $1,350 and heath aids. Additional exemptions of up to $525 per item for animals, books, clothing, crops, household furnishings and goods, and musical instruments are available, with a total exemption of up to $10,775. Payments from wrongful death suits, personal injury suits or lost earnings are also exempt. Filers may keep tools that are required to earn an income, life insurance policies, alimony and child support payments, and disability payments.
  
  

States that Allow Federal Exemptions

• Not all states allow their residents to choose between state exemptions and federal exemptions. As of 2010, filers in the following states have the option to choose which set of exemptions they would like to use when filing for Chapter 7 bankruptcy: Arkansas, Connecticut, Hawaii, Massachusetts, Michigan, Minnesota, New Jersey, New Mexico, Pennsylvania, Rhode Island, South Carolina, Texas, Vermont, Washington, and Wisconsin. Residents of all other states must use the state exemptions in a bankruptcy case.