Individuals in a bankruptcy can exempt certain kinds of property from the bankruptcy estate.  The individual debtor keeps the exempt property while the Trustee keeps the non-exempt property.  Joint bankruptcies for spouses (both husband and wife file together) can double the exemptions.

Corporations do not get exemptions nor do they get discharges.

An individual debtor is entitled to elect either the federal exemptions or the so-called "state exemptions."  The choice is often a trade-off, depending on the assets. Generally, state exemptions shield more property: the entireties real estate and most types of retirement plans.

Federal Exemptions: A specific set of exemptions specified in the Bankruptcy Code.

State Exemptions: Anything that’s exempt under non-bankruptcy law.