When a bankruptcy is filed, all property in your name becomes part of a “Bankruptcy Estate”, which in essence means the court has temporary control over your assets. In Chapter 7, a bankruptcy trustee looks at your assets to see if there is anything they can liquidate to pay your creditors. What can they take from you? What can you keep? Losing a home, car or retirement account could be devastating and it is important to know what is protected when you file.
California has two sets of Exemption codes one can apply to their property. Before filing your case, it is important to decide which exemptions you will be using in order to protect your assets. These exemption amounts are subject to change and the amounts in this article are reflective of the date of publication.
704 Exemptions
These exemptions are typically used by those who wish to protect a significant sum of home equity. Under this system, the “Homestead Exemption” provides protections over the following assets:
| Exemption Type | Exemption Amount |
| Homestead | Equity in a residence up to $75,000 for a single person under the age of 65; equity in a home for a married couple of up to $100,000; and equity in a home up to $175,000 for those disabled, or low-income couples over the age of 55. Starting January 1, 2021, the homestead exemption will be the greater of $300,000 or the countywide median sale price of a single-family home in the prior calendar year to which the debtor claims the exemption. This exempt is not to exceed $600,000. |
| Motor Vehicle | Up to $3,325 total may be applied to to motor vehicles. |
| Jewelry, Heirlooms, and Art | Up to $8,725 may be applied to jewelry, heirlooms or artworks. |
| Pensions | Private and public retirement accounts are exempt. |
| Public Benefits | Disability and unemployment benefits, workers’ compensation, public assistance benefits, and student financial aid are exempt. |
703 Exemptions
Flexibility is the main benefit of using 703 exemptions. Individuals who do not have any home equity or a small amount can file using these exemptions to take advantage of the “Wildcard Exemption”.
| Exemption Type | Exemption Amount |
| Homestead | The debtor’s equity in his or her residence up to $29,275. |
| Wildcard | The wildcard exemption can be used for any property. It is limited to $1,550, plus any unused amount from the homestead exemption (for a total of $30,825 if the homestead exemption is not used at all. |
| Motor Vehicle | Up to $5,850 total may be applied to one or more motor vehicles. |
| Jewelry, Heirlooms, and Art | Up to $1,750 for jewelry used primarily for personal, family, or household use. |
| Pensions | Tax-exempt retirement savings accounts (e.g., 401(k)s, 403(b)s) are completely exempt under federal non-bankruptcy law (i.e., notwithstanding the unavailability of federal bankruptcy exemptions in California); IRAs and Roth IRAs are exempt under federal non-bankruptcy law up to 1,362.800 per person.; |
| Public Benefits | Disability and unemployment benefits, workers’ compensation, veterans’ benefits, aid to the elderly or disabled, and crime victims’ reparations are exempt. |
| Tools of Trade | Implements, professional books, or tools of the trade are exempt up to $8,000. |
If you have questions about if your property would be protected in the bankruptcy process, please feel free to reach out to your Yuba City bankruptcy attorney at (530) 797- 4402.
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