Bankruptcy Exemptions, What Are They?
If you are thinking about filing for bankruptcy, you are probably wondering what you can do to safeguard your assets. A good number of bankruptcy cases are filed in an attempt to save a valuable asset, like the family home. When you no longer have to make payments on high interest rate credit cards because these debts are considered no longer due since you have filed bankruptcy, it can be easier to make your house payment and feel secure in the fact you will have a roof over your head. But there are other assets that you might also need to protect, and it can be helpful to know what things are exempt from a creditor’s reach, even in bankruptcy.
How Bankruptcy Exemptions work
Every state has a list of property considered exempt from attachment in bankruptcy, and the federal government has also come up with a list. In some states the debtor is given the choice of using the state exemptions, or the federal. In California however, there is no choice. Debtors in bankruptcy must use the state exemptions, but do get to choose between two different sets of exemptions. It is crucial to look at both of the California exemption systems and make a choice that works for you with the help of a Competent Bankruptcy Attorney. The exemptions are found in the California Code of Civil Procedure, and one of the most important exemptions to know about is the homestead exemption. Under one of the systems, you are allowed the following regarding your homestead:
Some Items Covered By Bankruptcy Exemptions
● An exemption of up to $75,000.00 if you are a single person, and not disabled.
● An exemption of up to $100,000.00 for a family where at least one person of the family does not have an interest in the homestead.
● $175,000.00 if you or your spouse are at least 65 years old or are physically or mentally disabled.
● $175,00.00 if you or your spouse are at least 55 years old, and have a low income and creditors are trying to force the sale of your home.
There are also exemptions for vehicles, personal property, and your paycheck. These are a few examples and are the exemptions under one of the exemption systems. There is a second exemption system that is applicable in bankruptcy only. You have to choose one exemption system or the other. You can’t use both at the same time.
This becomes important because if your assets are of a certain value, there may be equity over and above the exemption amount that is available to the Trustee to use for repayment to your creditors. This could include the Trustee seeking to seize your assets and sell them, give you the exempted amount and use the rest to pay your lenders. Knowing how exemptions work and how you can protect your property if you file bankruptcy is a vital part to the decision making process when considering filing for bankruptcy. Call us now at (916) 485-5444 to schedule your free attorney consultation.