Chapter 7 Bankruptcy filers in California receive some flexibility on which types of property that they would like to protect from liquidation. Californians are afforded two sets of “exemptions” in their state’s bankruptcy code. The first set of Exemptions is referred to as the 703 exemptions. The second set is called the 704 exemptions.
Which Do You Pick?
Picking between these two options depends on what kind of property you are attempting to protect. The main question a potential bankruptcy filer must answer is: do you rent or own your home? If you rent your residence, you may opt to use the 703 exemptions which allows you to utilize, in addition to other protections, a “Wildcard Exemption” which permits a filer to exempt over $30,000 in equity in assets (as of the date of this article’s
publication). Additionally, under these exemptions you can protect a good deal more of your vehicle’s equity than under the 704 exemptions.
Conversely, if you own your residence and wish to protect it from liquidation, the homestead exemption under the 704 set is much larger (by a factor of about ten times as much), but the amount you can protect is widely variable and depends on the county in which your home sits. You will need to talk with an attorney to see how much of your home’s equity you can protect in Chapter 7 bankruptcy. There are other differences between the two sets of exemptions, but this first question will typically determine your probable course of action.
To learn more about what kind of property you can protect in bankruptcy, you should speak with an attorney today to see which set of exemptions is right for your situation. Please feel free to reach out to your Yuba City bankruptcy attorney at (530) 797- 4402 to discuss how we can help you with your debts.
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