California Bankruptcy Exemption Facts
Filing bankruptcy sometimes means that you must turn over assets to creditors. This may be the best way to receive a discharge. However, in some cases, you may be able to keep some of your assets due to the special exemptions you are allowed under California law.
California Bankruptcy Exemption
States are allowed to choose one of two methods for bankruptcy exemptions: . California has chosen to create its own bankruptcy exemption scheme which is different from that of other states.
When an individual or married couple files for Chapter 7 or Chapter 13 bankruptcy protection, they must choose an exemption scheme and declare what property is to be protected by these exemptions. California actually has two separate exemption schemes available to debtors, so it is a good idea to compare both and see which offers the most benefits.
Exemption System 1
- Under the first exemption system, you are allowed to exempt a certain amount of equity in your primary residence. The amount depends on your status; for example, single, non-disabled filers are allowed up to $75,000, while those 65 or older or disabled may be allowed up to $175,000.
- Motor vehicles. Under System 1, $2,900 may be exempted from any motor vehicle.
- Personal property. Household items, jewelry, art and burial plots are just a few of the items of personal property covered by the exemption system. The amount varies according to the item in question.
- Within 30 days prior to filing bankruptcy, 75 percent of wages paid may be exempted.
- Retirements and pensions. There are many rules governing the exemption of pension and retirement benefits, and most depend on the type of retirement account in question.
- Tools of the trade, insurance and other benefits may be exempt under the first system in varying amounts set by statute.
Exemption System 2
The second exemption scheme is not allowed in all courts. Since these exemptions are only applicable in bankruptcy, you may not be able to use them against certain creditors. This means that in order to use System 2, it is wise to consult with an experienced bankruptcy attorney. Many of the same exemptions are available under the second system but in different amounts than those found in System 1.
For more information about bankruptcy exemptions and how they can help you protect your assets, contact Amerio Law Firm in Sacramento.