If an asset is subject to a mortgage or a lien, it is the value of the item after deducting the amount of the lien or liens that is used to figure the exemption. Some liens can be avoided to create exempt equity. Explore lien avoidance. The debtor claims property as exempt in the schedules that are filed to initiate the case. If no objections are filed to the exemptions, they become final 30 days after the 341 meeting.
Exempt property is then no longer property of the bankruptcy estate.
Second, used household goods and personal effects have little resale value, and so do not represent a real source of value to repay creditors. Since retirement plans are outside the estate, the debtor doesn't have to exempt them to keep them. IRA's and other retirement savings may be property of the estate but are frequently exempt. See Property of the estate and Retirement savings in bankruptcy. Exemptions are the one place where bankruptcy law varies from state to state.