Bankruptcy Exemptions

Under Chapter 7 bankruptcy law, the term “exemptions” refers to those assets that are exempt from seizure and liquidation by the Trustee appointed over your case. Furthermore, exemptions protect your property from the reach of your creditors whose claim arose before the your bankruptcy filing. As long as you properly claim your exemptions when you prepare your bankruptcy petition, you will be allowed to keep your assets after bankruptcy. The protections of exemptions also include barring creditors with non-dischargeable debts from ever enforcing a judgment lien against your home. The only exception to exemptions are non-dischargeable taxes and support payments.

In California, there are two sets of exemptions for you to choose from. They are listed in the California Code of Civil Procedure, Sections 703 and 704. Each set offers its own advantages. However, you cannot use both sets; you must choose one set or the other. You must carefully examine your assets in total, and choose which set is best suited to protect your assets.

If you are filing as husband and wife, both of you must select the same set of exemptions. Furthermore, a husband and wife cannot double their exemptions.

The primary benefit to choosing the Section 703 Exemptions set is the “Wild Card” exemption, which allows you to exempt up to $26,425 worth of any of your assets. Also, you can exempt up to $5,100 worth of equity in your motor vehicles.

A debtor would opt to choose the Section 704 Exemptions if he or she owns a house with equity. The “Homestead Exemption” under Section 704 allows a single debtor to exempt up to $75,000 worth of equity in his or her home, $100,000 if the debtor is married or the head of a household, and &175,000 if the debtor is 65 years or older, or a physically or mentally disabled person, or a person 55 years or older with an income of less than $25, 000 (or $35,000 if a married couple).

In conclusion, because of the power of exemptions under bankruptcy, it is vitally important to choose the proper set of exemptions and accurately exempt your assets. Consult the attorneys at Tran Bankruptcy Law to ensure that your assets are properly exempted.