What can I keep in bankruptcy?
One commonly asked question regarding bankruptcy is what can a debtor exempt (keep after the bankruptcy) in chapter 7 bankruptcy in California. When you file for bankruptcy, not all will be lost as California allows you to keep some things necessary for home and work life. Contact a Riverside Bankruptcy Attorney for more information.
Distinguishing 2 Bankruptcy Systems
System 1 is the better choice if you own a home and have built up a substantial amount of equity.
System 2, however, is the best fit if you don’t own any real property but want to protect all of your personal property.
For system 1…
– California bankruptcy exemptions protect homeowners such as those living in family homes, apartments, burial plots, boats, etc.
o Single Person Household: up to $75,000 in equity
o Family Household: $100,000
o If 65 years of age or older/ have a mental or physical disability: $175,000
o At risk of a forced sale of your home: $175,000
§ must be 55 or older, single, with an income of less than $25,000 per year OR 55 or older, married, making less than $35,000 per year
For system 2…
– $2,680 in equity
Motor Vehicle Exemptions
– California exemption also covers motor vehicles such as cars and mobile homes.
For system 1…
o If you have been making consistent payments and they add up to $3,050, your vehicle will be protected.
For system 2…
o If you are caught up with your payments, you could be eligible for the 2 motor vehicle exemption. Your payments must be, in total, less than $5,350.
Exemptions on Personal Property
– California’s exemption laws protect most of your personal property that you use on a day-to-day basis.
For system 1…
o household items, cemetery/burial plots, health aids, personal injury support, jewelry, heirlooms, and art up to $8,000, bank deposits from social security payment, building materials to repair/improve home
For system 2…
o health aids, wrongful death recoveries, personal injury recovery up to $26,800, burial plot up to $26,800 in place of homestead exemption, jewelry up to $1600
o clothes, instruments, appliances, furnishings, animals, books, crops (up to $675 per item)
Wage Exemptions
For system 1…
– 75% of wages are exempt according to California’s bankruptcy laws.
– Employee vacation credits: at least 75%
For system 2…
– NO EXEMPTIONS
Retirement and Pension Exemptions
For system 1…
o tax exempt retirement accounts, IRAS & Roth IRAS, public retirement benefits, private retirement plans/benefits, public employees, county employees, county peace officers, county fire fighters
For system 2…
o tax exempt retirement accounts, ERISA
Exemptions on Public Benefits
For system 1…
o unemployment/disability benefits, union benefits, workers’ compensation benefits, public assistance benefits, relocation benefits, student financial aid
For system 2…
o compensation of unemployed, social security, veterans’ benefits, public assistance, crime victims’ benefits
Exemptions on Tools of Trade
For system 1…(exempt up to $8,000)
o tools, materials, books, uniforms, instruments, 1 commercial vehicle, equipment, furnishings
For system 2… (exempt up to $8,000)
o tools, books, implements of trade
Insurance Exemptions
For system 1…
o disability or health insurance, fidelity bonds, life insurance, homeowners’ insurance up to value of homestead exemption
For system 2…
o unmatured life insurance policy, disability benefits, loss of future earning payments necessary for support
Alimony and Child Support Exemptions
For system 1…
o NO EXEMPTION
For system 2…
o amount needed for support of children
Wildcard Exemption
– The “wildcard” exemption is to be used for property that does not fall under any of the previously listed categories or exceeds the limit stated in the exemption.
For system 1…
o NO EXEMPTION
For system 2…
o If homestead exemption is used, you are eligible for $1,425 plus unused burial or homestead exemption in any property.
o If homestead exemption is NOT used, you are able to receive $28,225 in total.