California Bankruptcy Laws and Exemptions
If you are considering filing for bankruptcy in California, one of the important issues your attorney will address in a consultation is exemptions. Federal exemptions are not available to those filing bankruptcy in California, so potential asset exposure will be determined solely by state law. California law provides for two sets of exemptions. Debtors filing bankruptcy in California can elect to use bankruptcy exemptions or state law collection exemptions. Below is a brief summary of California homestead and automobile exemption laws that are applicable to state court collection matters. If you are considering filing for bankruptcy, consult a California bankruptcy attorney.
CA Homestead Exemption – Protecting Your Home
California bankruptcy law provides different exemption amounts for different living arrangements. The exemption increased as of January 1, 2010 with individuals allowed to claim $75,000 of home equity as exempt and couples entitled to a $100,000 exemption. Those 65 and older, disabled or over 55 with limited income can protect up to $175,000 of value in their homes. Be aware that, in order to keep your home post bankruptcy, it will still be necessary to make normal monthly mortgage payments.
CA Auto Exemption – Can I Keep My Car If I File Bankruptcy in California?
Debtors in California are permitted to protect up to $2,300 of equity in all their motor vehicles. Value or equity that execceds this amount is considered nonexempt and potentially subject to sale by the trustee. For the purpose of determining the equity in a car, the fair market value is determined by reference to used car price guides customarily used by California automobile dealers unless the debtor’s car is not listed in such a guide. Be aware that, if your car has an outstanding loan, it will still be necessary to make normal monthly car payments in order to keep the vehicle after bankruptcy.
Clearly, the affect that filing bankruptcy will have on one’s assets is of paramount concern. In a chapter 7 bankruptcy case, the trustee will not be able to sell assets that are exempt. Even if you find that some of your property has nonexempt value, it is usually an option to “buy out” or redeem nonexempt property by making a one time payment to the trustee. In a chapter 13 bankruptcy context, the value of your nonexempt property will have to be paid out over the life of your repayment plan. California bankruptcy laws can be complex, consult an attorney with questions.
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