Exemptions laws are enacted to allow judgment debtor to keep certain categories and amount of assets to meet basic necessities of life and start fresh. Bankruptcy is generally a federal proceedings and there is a federal list of exemptions. However, each State has enacted its own exemptions laws depending upon its own economics. California has two different sets of exemptoins laws under Chapter 703 and 704 of the California Code of Civil Procedure. The amount of these statutes are updated every three years. Debtor is not allowed to mix and match exemptions under Chapter 703 and 704. -they must choose which set of exemption will be utilized in their bankruptcy.
Due to existence of exemption laws, debtors are allowed to keep equity in the asset to the extent exemption is allowed. Upon filing of bankruptcy all the debtor property constitute estate property unless properly exempted. If only portion of the asset is allowed to be exempted under the laws, than chapter 7 trustee is allowed to sell the asset to the pay the creditors by selling non-exempted portion of the asset.
Exemption Categories: The general categories of exemptions are homestead, personal property, motor-vehicle, Business licenses, Deposit Accounts, Disability Insurance Benefits, Appliances, art and Heirlooms, Social Security Benefits, Tools of Trade, Cash, Clothing, etc. Additional detailed lists of available exemptions can be viewed at Exemptions from Enforcement of Judgments.
California Homestead Exemption: Allows you to keep the equity in the primary residence to the extent of the homestead amount allowed. Pursuant to Code of Civil Procedure Section 703.730, allowed amount of homestead exemption is as follows:
1. Seventy Five Thousand ($75,000) for individual debtor;
2. One Hundred Thousand ($100,000.00), If the debtor or spouse of the judgment debtor who resides in the homestead along with one member of the family member of family who has no interest or his or her only interest is community property;
3. One Hundred Seventy Five Thousand $175,000.00 if either debtor or his spouse is 65 years of age or older or physicall or mentally disable and is unable to engage in substantial gain ful employment or single individual of 55 years of age or oler with gross annual income of no more than $25,000 or if married total joint gross income not exceeding $35,000.00
Motor Vehicle Exemption: $2,900
Personal Household Items: Each item houshold appliance, furniture to the extent necessary
Deposit Accounts with direct payment of Social Security or public benefits
- Public benefits, one depositor is designated payee exempt upto $1,525
- Social Security benefits, one depositor is designated payees maximum exemption allowed upto $ 3050
- Public benefits, two or more depositors are designated payees allowed exemption upto $2,275
- Social Security benefits, two or more designated payees allowed exemption upto $4575
It is evident that filing for the benefit of bankrutpcy under Bankruptcy Code, does not mean you loose your assets and there are exemption laws, which allows debtor to exempt the assets properly. However, exemption protection is only available, if all the debtors assets are disclosed on the schedules and in the Statement of Affairs and are properly exempted. Exemption laws are complex and When claiming bankruptcy exemptions, it is essential that you contact a qualified bankruptcy attorney who is familiar with the exemption process. At the Kalra Law Firm, we have the experience and knowledge to get your most valuable assets exempted from liquidation, so you can keep the things that you need to live your every day life, as well as the things that mean the most to you.
Contact us to set up an appointment for a consultation to discuss your bankruptcy case and how best to list your valuable assets so they are exempt from the liquidation process. Call us today. (310) 325-9012.