What Is Exempt From Bankruptcy?
This article outlines the property you get to keep when you file for Chapter 7 bankruptcy in California.
Your nonexempt property becomes part of your bankruptcy estate.
Bankruptcy trustee can sell it to pay off your creditors when you file for Chapter 7 bankruptcy.
However, you can also purchase this property from your own bankruptcy estate.
Your exempt property is the property you get to keep.
You must use one of the two California's exemption systems instead.
This state does not allow you to claim any federal exemptions.
California residency requirement In order to be eligible for California exemptions, you must establish California residency.
This rule is to prevent people from gaming the system by moving to states with most favorable exemptions.
To establish California residency for Chapter 7 bankruptcy purposes, you must have lived in the state for at least two years.
If you've lived in California for more than 91 days but less than two years, you must use exemptions in the state where you lived for the greater part of the 180-day period immediately prior to the two year period before you filed for Chapter 7 bankruptcy.
If you've lived in California for less than 91 days, you can either file in the state where you lived immediately before that or wait until you've lived in California for at least 91 days to file for Chapter 7.
If these rules make it impossible for you to be eligible for any state's exemptions, you can use federal exemptions.
California Chapter 7 exemptions California is one of only eight states that use "bankruptcy-specific" exemptions.
That means that those exemptions only apply in your bankruptcy case but you cannot use the exemptions against judgment creditors.
When filing for Chapter 7 bankruptcy in California, you must choose one of the two available systems in its entirety, no mixing and matching is allowed.
The list below is current as of February 2, 2012 but not exhaustive.
With System 1, you get to keep: Homestead ($75,000 of equity if you're single and not disabled; $100,000 for families if no other member has a home; $175,000 if you're 65+ OR disabled); disability or health benefits, most types of tax-exempt retirement accounts, motor vehicle to $2,725, no wildcard.
Under System 2, married couples may not double any exemptions.
You get to keep: Homestead to $22,075; disability benefits; alimony, child support; motor vehicle to $3,525; no wage exemption; wildcard: $1,175 of any property.
Try to resist the temptation to give away your property to relatives and friends, or to the creditor you like most before filing for Chapter 7 bankruptcy.
Creditors are entitled to fair and equal treatment, and bankruptcy trustee has the right to take that property back.
However, there is nothing wrong with engaging in nonfraudulent pre-bankruptcy planning that maximizes the exceptions available to you.
Your nonexempt property becomes part of your bankruptcy estate.
Bankruptcy trustee can sell it to pay off your creditors when you file for Chapter 7 bankruptcy.
However, you can also purchase this property from your own bankruptcy estate.
Your exempt property is the property you get to keep.
You must use one of the two California's exemption systems instead.
This state does not allow you to claim any federal exemptions.
California residency requirement In order to be eligible for California exemptions, you must establish California residency.
This rule is to prevent people from gaming the system by moving to states with most favorable exemptions.
To establish California residency for Chapter 7 bankruptcy purposes, you must have lived in the state for at least two years.
If you've lived in California for more than 91 days but less than two years, you must use exemptions in the state where you lived for the greater part of the 180-day period immediately prior to the two year period before you filed for Chapter 7 bankruptcy.
If you've lived in California for less than 91 days, you can either file in the state where you lived immediately before that or wait until you've lived in California for at least 91 days to file for Chapter 7.
If these rules make it impossible for you to be eligible for any state's exemptions, you can use federal exemptions.
California Chapter 7 exemptions California is one of only eight states that use "bankruptcy-specific" exemptions.
That means that those exemptions only apply in your bankruptcy case but you cannot use the exemptions against judgment creditors.
When filing for Chapter 7 bankruptcy in California, you must choose one of the two available systems in its entirety, no mixing and matching is allowed.
The list below is current as of February 2, 2012 but not exhaustive.
With System 1, you get to keep: Homestead ($75,000 of equity if you're single and not disabled; $100,000 for families if no other member has a home; $175,000 if you're 65+ OR disabled); disability or health benefits, most types of tax-exempt retirement accounts, motor vehicle to $2,725, no wildcard.
Under System 2, married couples may not double any exemptions.
You get to keep: Homestead to $22,075; disability benefits; alimony, child support; motor vehicle to $3,525; no wage exemption; wildcard: $1,175 of any property.
Try to resist the temptation to give away your property to relatives and friends, or to the creditor you like most before filing for Chapter 7 bankruptcy.
Creditors are entitled to fair and equal treatment, and bankruptcy trustee has the right to take that property back.
However, there is nothing wrong with engaging in nonfraudulent pre-bankruptcy planning that maximizes the exceptions available to you.