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 Oregon, bankruptcy exemptions play a crucial role in both Chapter 7 and Chapter 13 bankruptcy filings. These exemptions allow individuals to retain certain assets, up to specific values, without them being liquidated or used to repay creditors. The homestead exemption in Oregon is particularly important for homeowners, as it enables them to protect equity in their primary residence. As of the knowledge cutoff in 2023, Oregon allows a homestead exemption of up to $40,000 for an individual and $50,000 for a joint filing (such as a married couple). This means that if the equity in the home does not exceed these amounts, it is generally protected from being sold to satisfy debts. It's important to note that exemption amounts can change, and there are other exemptions available for personal property, wages, retirement accounts, and more. Debtors should consult with an attorney to understand the full range of exemptions available and how they apply to their specific situation.