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What Exemptions Do
Exemptions are the rules that let you keep property out of the bankruptcy estate. In a Chapter 7 case the trustee can collect and sell non-exempt property to pay creditors; exempt property is shielded from that process. According to the U.S. Courts (uscourts.gov), the Bankruptcy Code offers a federal exemption set under §522(d), but states are allowed to require their own schemes instead. The result is that what you keep depends heavily on which state's law applies. People's Justice is not a law firm and does not provide legal advice; the material below is general information about how the courts describe exemption law.
The 730-Day Domicile Rule
Which state's exemptions apply is set by the 730-day domicile rule in §522(b)(3) of the Bankruptcy Code. The rule looks back at where you were domiciled during the 730 days — two years — before you file. If you lived in a single state for that entire window, that state's exemptions generally govern. If you moved during the look-back period, the analysis becomes more complex and may point to the state where you lived for the greater part of the 180 days before the 730-day window. Congress adopted this rule, per uscourts.gov, so that filers cannot relocate to a debtor-friendly state on the eve of bankruptcy purely to claim richer protections.
How to think about the look-back
First, identify every state you were domiciled in during the two years before filing. Next, determine whether one state covers the whole window or whether you moved. Finally, apply the §522(b)(3) ordering rules to pin down the controlling state. Because the answer can differ from where you live today, this step is best confirmed by an attorney before any property planning.
Unlimited Homestead States: Texas and Florida
Texas and Florida are known for an unlimited homestead exemption — they protect home equity without a dollar cap. That generosity comes with caveats: both states attach acreage limits (distinguishing urban from rural property) and time-of-ownership requirements, and federal bankruptcy law layers on its own limits in certain circumstances. An unlimited homestead on paper does not mean unlimited protection in every case, which is why the acreage and timing rules must be applied to your specific property.
California: System 1 vs. System 2
California does not permit filers to choose the federal §522(d) set. Instead, California debtors elect between two state exemption systems. System 1 — the exemptions under California Code of Civil Procedure §704 — tends to favor homeowners with meaningful home equity, because it provides a larger homestead protection. System 2 — the exemptions under CCP §703 — tends to favor renters and filers with little or no home equity, because it includes a flexible 'wildcard' that can be applied to property of the filer's choosing. You pick one system or the other for the whole case; you cannot mix protections from both.
Choosing the wrong system, or the wrong state under the 730-day rule, can needlessly expose property the law would otherwise protect. People's Justice is not a law firm and does not provide legal advice; we are not a government agency. We can connect you with a licensed attorney who will identify the controlling state and the best-fitting exemption set for your situation.
Related Pages
The 341 Meeting and the Trustee
The 341 meeting of creditors is run by your trustee — not a judge — and is typically held 20 to 40 days after filing (uscourts.gov). The trustee places you under oath and asks about your petition and finances. Most consumer meetings are short, and creditors rarely attend. This is general information, not legal advice.
What Bankruptcy Can and Can't Discharge
Chapter 7 discharges most unsecured debts like credit cards and medical bills, but the Bankruptcy Code lists debts that survive: most recent taxes, domestic support, most student loans (absent an undue-hardship adversary proceeding), and fraud debts (uscourts.gov). Liens on secured property can survive discharge. This is general information, not legal advice.
Life After Chapter 7: Rebuilding Credit
After discharge — typically about 90 to 100 days after filing for a no-asset case (uscourts.gov) — the automatic stay ends and the fresh start begins. A Chapter 7 discharge is available once every 8 years (uscourts.gov), and a filing affects credit for years. This is general information, not legal advice.
The Means Test, Explained
The means test compares your 6-month average gross household income to your state's median for your household size (Form 122A-1; U.S. Trustee). Below median means Chapter 7 is generally available; above median triggers the longer Form 122A-2 calculation. Median tables are effective April 1, 2026 (UST). This is general information, not legal advice.
Chapter 7 Bankruptcy Lawsuit
Chapter 7 bankruptcy is a court-supervised process under the U.S. Bankruptcy Code that can discharge most unsecured debts. The U.S. Trustee's means test (Form 122A-1) compares your 6-month average gross income to your state's median family income for your household size; the filing fee is $338 (cacb.uscourts.gov). A trustee — not a judge — administers the case and holds the 341 meeting of creditors 20 to 40 days after filing. Exemptions, governed by the 730-day domicile rule under §522(b)(3), determine which property is protected. Most no-asset cases reach discharge in about 90 to 100 days, and a debtor can receive a Chapter 7 discharge once every 8 years (uscourts.gov). People's Justice is not a law firm and does not provide legal advice; we connect you with licensed attorneys.
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