Is equity the same as what my property is worth?

No. Value is the whole amount; equity is what is left after subtracting what is owed against the property. A vehicle worth more than the loan against it has equity equal to the difference. For exemption purposes, value means fair market value as of the date the petition is filed (11 U.S.C. § 522(a)(2)).

Which state's exemption amounts apply to my equity?

Generally the law of the place where your domicile has been located for the 730 days immediately before filing; if it was not in one state for that period, the statute points to an earlier 180-day window (11 U.S.C. § 522(b)(3)(A)). Amounts differ substantially by state, so use your state's page rather than a national figure.

Do I subtract the loan before I list my property?

No. The official schedule asks for the current value of the portion you own without deducting secured claims or exemptions, and secured debts are listed on a separate schedule (Bankr. M.D. La. filing packet — Ch13_Vol_Petition_ Package-2026.pdf). Equity is what emerges from comparing those entries, not something you calculate before filling in the value.

Glossary

Equity: What It Means in Bankruptcy

Equity is the value of property minus what is owed against it. If a car is worth more than the loan balance secured by it, the difference is equity. In bankruptcy, equity matters because exemptions protect equity, not the property itself — and value is measured as fair market value on the filing date (11 U.S.C. § 522(a)(2)).

Key points

Equity is the property's value minus the liens and loans secured by it.
Under 11 U.S.C. § 522(a)(2), value means fair market value as of the date the petition is filed.
Filing creates an estate that includes the debtor's legal and equitable interests in property (11 U.S.C. § 541(a)(1)).
Exemptions protect equity up to published amounts; they do not eliminate a valid mortgage or car lien.
Exemption amounts differ by state, and some states require you to use their list instead of the federal one.

You may have run into the word "equity" on a bankruptcy form or in a letter and not been sure what it was asking. It is a simple idea with real consequences: it is the part of something you own outright. Here is what it means and why bankruptcy paperwork keeps returning to it.

What does equity actually mean?

Equity is what property is worth minus what is owed against it. A house worth less than its mortgage balance has no equity; a paid-off vehicle is all equity. The official individual bankruptcy forms use a related phrase, "legal or equitable interest," which the courts describe as a broad term covering all kinds of property interests in tangible and intangible property, whether or not someone else also has an interest in it (U.S. Bankr. Ct. D. Ariz., Instructions for Completing the Bankruptcy Petition, Schedules and Statements). The Bankruptcy Code fixes how value is measured for exemption purposes: value means fair market value as of the date the petition is filed, or, for property that becomes estate property later, as of the date it does (11 U.S.C. § 522(a)(2)). That date matters. A number from a year ago, or a hoped-for sale price, is not the measure.

Why does equity matter in a bankruptcy case?

Filing a case creates an estate that includes, with limited exceptions, all legal or equitable interests of the debtor in property as of the commencement of the case (11 U.S.C. § 541(a)(1)). An individual debtor may then exempt certain property from that estate (11 U.S.C. § 522(b)(1)). Exemptions are written as amounts of interest in property — for example, a stated interest in one motor vehicle — so what they reach is equity, not the object. That is why the schedules ask separately for what property is worth and what is owed on it. Where equity is fully covered by an exemption, there is usually nothing there for creditors. Where equity exceeds the available exemption, the difference is value in the estate, and how it is handled depends on the chapter and the facts of the case.

How does equity work in practice?

On the property schedule, you list current value without deducting secured claims or exemptions, and secured debts are listed separately (Bankr. M.D. La. filing packet — Ch13_Vol_Petition_ Package-2026.pdf). Equity is the difference between the two.

Real estate: market value minus the mortgage balance and any other liens recorded against the property.
Vehicles: value minus the payoff on the car loan. The forms treat property you own as including property you still owe money on (U.S. Bankr. Ct. D. Alaska, The Forms Individuals and Married Couples Need to File Bankruptcy).
Bank accounts and personal items: generally no lien, so the balance or value is the equity.
Exemption lists then apply to that equity, and the applicable list depends on your state — 11 U.S.C. § 522(b)(3)(A) points to the law of the place where your domicile has been located for the 730 days before filing.

How equity is described on the schedules
What the form asks	What it captures
Current value of the portion you own	Fair market value, before deducting anything
Secured claims against the property	Mortgages, car loans, judgment and statutory liens
Exemption claimed	The amount of equity the applicable list protects

What do people get wrong about equity?

The most common error is treating an exemption as protection of the property itself. It is not. An exemption covers equity; it does not avoid or eliminate a valid lien. A creditor holding a mortgage or car loan keeps its rights in the collateral, and a valid lien that was not eliminated in the case may still be enforced against the property afterward (U.S. Bankr. Ct. M.D. Ala., Consumer Pro Se Debtors Guide). Two other mistakes are frequent. People estimate value optimistically in either direction, when the measure is fair market value on the filing date (11 U.S.C. § 522(a)(2)). And people assume the federal exemption list is always available. It is not — a state's law can specifically decline to authorize the federal list (11 U.S.C. § 522(b)(2)), so the amounts that apply to your equity depend on your state's rules. Check your state page for the figures that apply where you live.

Frequently asked questions

Is equity the same as what my property is worth?: No. Value is the whole amount; equity is what is left after subtracting what is owed against the property. A vehicle worth more than the loan against it has equity equal to the difference. For exemption purposes, value means fair market value as of the date the petition is filed (11 U.S.C. § 522(a)(2)).
Does an exemption mean creditors cannot touch my property?: Not exactly. An exemption covers equity up to a published amount; it does not avoid a valid lien. A mortgage or car loan survives, and a lien that was not eliminated in the case may still be enforced against the property later (U.S. Bankr. Ct. M.D. Ala., Consumer Pro Se Debtors Guide). Missing payments on secured collateral remains a separate risk.
Which state's exemption amounts apply to my equity?: Generally the law of the place where your domicile has been located for the 730 days immediately before filing; if it was not in one state for that period, the statute points to an earlier 180-day window (11 U.S.C. § 522(b)(3)(A)). Amounts differ substantially by state, so use your state's page rather than a national figure.
Do I subtract the loan before I list my property?: No. The official schedule asks for the current value of the portion you own without deducting secured claims or exemptions, and secured debts are listed on a separate schedule (Bankr. M.D. La. filing packet — Ch13_Vol_Petition_ Package-2026.pdf). Equity is what emerges from comparing those entries, not something you calculate before filling in the value.

Sources

By Antonio G. Jimenez, Esq. · Florida Bar No. 21022

Sources verified July 28, 2026 · How we verify

Every figure on this page is drawn from a primary legal source and checked against our canonical legal database before publication. Bankruptcy.law is not a law firm and does not provide legal advice.