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 West Virginia, bankruptcy exemptions allow individuals to protect certain property from creditors when they file for bankruptcy. The homestead exemption specifically protects equity in a debtor's home. As of the knowledge cutoff in 2023, West Virginia allows a debtor to exempt up to $25,000 of equity in their primary residence under the homestead exemption. This means if the equity in the home is less than or equal to $25,000, it may be protected from being sold to pay creditors in a bankruptcy case. Additionally, West Virginia offers a wildcard exemption that can be applied to any property, including a home, which can further protect equity. The amounts of exemptions can differ if filing jointly with a spouse. It's important to note that these exemptions apply differently in Chapter 7 and Chapter 13 bankruptcy. In Chapter 7, non-exempt assets can be liquidated to pay creditors, while in Chapter 13, exemptions can affect the amount you repay under a reorganization plan. Debtors in West Virginia should consult with an attorney to understand how state and federal exemptions can be applied in their specific case, as there are complex rules about which exemptions can be used and how they interact.