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 South Dakota, bankruptcy exemptions play a crucial role in both Chapter 7 and Chapter 13 bankruptcy filings. The state allows individuals to use state-specific exemptions to protect their assets, including the equity in their home, from being liquidated to pay creditors. The homestead exemption in South Dakota is particularly generous, allowing an unlimited amount of equity to be exempted in the debtor's primary residence, as long as the property does not exceed one acre in a town or city or 160 acres in the country. However, this exemption is only available if the debtor has occupied the home for at least 6 months before filing for bankruptcy. Other exemptions in South Dakota include personal property, insurance, pensions, public benefits, tools of the trade, and wages. It's important to note that South Dakota does not allow the use of federal bankruptcy exemptions; instead, residents must use the state's exemption list. An attorney can provide guidance on how these exemptions apply to an individual's specific situation in a bankruptcy case.