Bankruptcy exemptions protect the equity in your property from creditors and the bankruptcy court—preventing the equity from being used to pay your creditors. Equity is the value of property after you subtract the amount of any liens against the property from its fair market value.

The equity in your home is one such asset in bankruptcy. And bankruptcy exemptions—including the homestead exemption—allow you to protect the property you will need to maintain a home and employment after bankruptcy.

Bankruptcy exemption amounts vary by state, so the amount you will be able to protect will depend on where you live and the type of bankruptcy you file (Chapter 7 or Chapter 13).

In Alaska, bankruptcy exemptions play a crucial role in both Chapter 7 and Chapter 13 bankruptcy filings. These exemptions allow individuals to retain certain assets, with the homestead exemption specifically protecting equity in one's home. As of the current regulations, Alaska's homestead exemption allows an individual to exempt up to $72,900 of equity in their primary residence. This amount can be doubled for married couples filing jointly. It's important to note that to qualify for the Alaska exemptions, you must have lived in the state for at least two years before filing for bankruptcy. If you haven't lived in Alaska for the required period, you may need to use the federal exemption scheme or the exemptions from the state where you lived previously. Additionally, Alaska allows debtors to choose between the state's exemption system and the federal bankruptcy exemptions, providing flexibility in asset protection strategies. An attorney can provide guidance on the most advantageous exemptions to use based on individual circumstances.