What is a homestead exemption?

Equity in a home is protected up to a certain amount which varies from state to state. Equity is the difference between the value and the amount you owe. If your home is worth $200,000 and you owe $140,000, your equity is the difference of $60,000. Homes purchased within 1,218 days before filing are limited to a cap of $125,000 in equity.

ANTHONY VO: For example, Nevada allows up to $350,000 in equity as of the writing of this material. But if you purchased your home less than 1218 days ago you would only be entitled to the cap of $125,000. If the cap in your state is less than $125,000, it remains unaffected, meaning it does not increase to $125,000 just because you bought it less than 1218 days ago. ANTHONY: By the way, I have no idea why they came up with this precise number of 1218 days. Home exemptions are also limited to $125,000 if the debtor has been convicted of a felony, is guilty of state or federal securities fraud, racketeering, or intentional torts that have caused serious bodily injury or death within five years of filing.