Some people envision that filing bankruptcy means the debtor is kicked to the curb with a suitcase of clothes while they watch their house and all their belongings be sold off by an auctioneer. Not so!!! Bankruptcy exemptions are like “allowances”, or caps on the value of things that one is allowed to retain during and after filing bankruptcy. Things such as furniture, housing, vehicles, and money are among the items one may keep, subject to their value and the allowance permitted by the exemption.
There are federal exemption laws, and in some states, debtors may alternately choose state exemption laws. In California, however, use of the state exemption statutes is required.
There are two sets of exemptions in CA and one must choose between the two. One set is geared towards those claiming a “homestead” interest in property. The homestead exemption includes real property or personal property (such as a mobile home) where you live. The maximum homestead exemption based on equity in your residence is $75,000 for a single person. The amount increases depending on your age, marital status, etc. If you have no positive equity in your home, you can keep your home without declaring an exemption for it. This first set of exemptions identifies other allowable exemptions.
The second set of California exemptions is geared towards those who have equity in their home, or do not own real estate at all. This set of exemptions includes a “wildcard” which allows up to $21,825 of any property, at the debtor’s discretion, in addition to the specified exemptions for other property.
The coordination with your attorney to select the exemptions to use in order to keep your property, is a critical part of retaining as much of your assets as possible when filing for bankruptcy. There are an unlimited number of scenarios that can play out depending on what you own, what you owe, and what you want to keep. For these reasons, it is very important that the legal counsel you retain to guide you through the process is knowledgeable about exemptions and your rights.
If you would like a free telephonic consultation regarding bankruptcy or any other legal matter, please contact us at (714) 331-1014 or email us at: info@locklearlaw.com.
Written by: Scott Reece
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