California Bankruptcy Exemptions

Exempt Properties in California

One of the overriding things that people worry about before filing bankruptcy is that they are going to lose everything they own.  This worry is nothing more than a myth.

The federal bankruptcy laws were written to enable people to regain control of their lives and financial situation, not leave them in worse shape than they were before filing. Bankruptcy is meant to offer you a clean start and allows for you to keep essential properties so that you remain on your feet throughout the process.

A Chapter 13 bankruptcy filing actually allows you to keep all of your possessions because it is based on creating a repayment plan with all of your creditors that works for both sides.

In a Chapter 7 filing there are possessions that you may lose.  Any non-exempt properties will be sold when you file Chapter 7 bankruptcy. The proceeds from the sale will then be distributed to your creditors to satisfy some of your debt.  However, the law allows for property exemptions, and you are able to keep all of those assets.

What is an Exempt Property

California bankruptcy law allows for a long list of properties that can be exempt from all bankruptcy proceedings (up to a certain fair market value).  Once you file your bankruptcy petition, the trustee overseeing your case controls properties that are not exempt.  These properties are sold in an effort to raise the funds to repay your creditors.  You retain control over properties that are exempt.

Remember, the goal of bankruptcy laws is to allow you to get back on your feet and regain financial stability.  Rather than taking everything you own and leaving you with nothing, bankruptcy law allows you to keep most of your household goods and home furnishings.

The following are several types of property exemptions you will find in California.  Please note the exemption amount shown is subject to change at the discretion of the California state legislature.

  • Homestead: Your home and the property it occupies are exempt from bankruptcy proceeding up to the amount of $75,000 for families.  ($50,000 if single and not disabled, $125,000 if 65 or older, or physically or mentally disabled; $100,000 if 55 or older, single and earn under $15,000 or married and earn under $20,000.) This exemption cannot be doubled if both a husband and wife are filing.  This exemption must also be your place of residence.
  • Personal Property: This exemption includes items such as furniture, appliances, and furnishings.
  • One Car: The fair market value of your vehicle is not to exceed $1,900.
  • Clothing: Clothing that is used primarily for personal, family, or household purposes and does not exceed $500 is considered to be exempt from bankruptcy proceedings.
  • Life Insurance: Life insurance proceeds  are exempt from proceedings.  The policy must be payable to a surviving spouse or child.
  • Child support or spousal maintenance: If received under a court order these payments are exempt from bankruptcy filings.
  • IRAs
  • Workers Compensation Benefits
  • Welfare Benefits

This list is not exhaustive it is only intended to list some of the highlighted assets which are protected under California bankruptcy law.  The law offices of your Fresno Bankruptcy Attorney will help you understand which of your properties are protected under California bankruptcy laws.

Contact our offices today for your free bankruptcy consultation.