Exempt property is property that can not be taken from you by your creditors. In other words, it is property that is exempt from levy by creditors. Even hundreds of years ago in England, where our legal system was developed, debtors were able to keep the shirts on their backs. Today the law is more generous. The idea behind exemptions is that debtors get to keep the minimal property necessary to sustain themselves and their livelihoods. So, in most states, the list of exempt property includes things like clothing and personal effects, tools of the trade, one vehicle per driver (up to a limited dollar amount of value), your home (up to a limited dollar amount of value in most states), retirement accounts, and life insurance policies.
After hearing that list, most people say, “That covers everything I own. What kinds of things are not exempt?” Common examples of non-exempt property which CAN be taken by creditors include boats, RV’s additional real estate (i.e. real estate other than your homestead), stocks/bonds, ownership of a business, expensive jewelry and cash in a checking or savings account.
Each state has its own list of which types of property are on the list and what is on the list can vary greatly from state to state. And there are several exceptional types of debts, such as child support and taxes, that can allow creditors to reach even otherwise exempt property.
Also, if a debtor voluntarily places himself into bankruptcy, additional federal laws come into play which can vary what is exempt and what is not.