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 North Dakota, bankruptcy exemptions allow individuals to protect certain assets when filing for bankruptcy, ensuring they are not left destitute. The homestead exemption is particularly relevant for homeowners, as it protects a certain amount of equity in their primary residence. As of the knowledge cutoff in 2023, in North Dakota, the homestead exemption allows an individual to exempt up to $100,000 of equity in their home. This means that if the equity in the home is less than or equal to $100,000, it cannot be used to pay creditors in a bankruptcy case. The specific amount of the exemption may be higher if the property is owned jointly by a married couple. It's important to note that these exemptions apply differently depending on whether the bankruptcy is filed under Chapter 7 or Chapter 13. In a Chapter 7 bankruptcy, assets can be liquidated to pay off debts, while in a Chapter 13 bankruptcy, debtors enter a repayment plan. Therefore, the exemptions play a crucial role in determining what property a debtor can keep. Debtors in North Dakota should consult with an attorney to understand how state and federal exemptions apply to their specific situation and to ensure they utilize the exemptions most advantageous to them.