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Irvine Bankruptcy Lawyer / California Bankruptcy Exemptions

Chapter 7 is known as “straight bankruptcy” because it doesn’t involve a repayment plan the way Chapter 13 does. Instead, the goal of Chapter 7 is to eliminate (“discharge”) all unsecured debt. If approved by the bankruptcy court, Doctor bills, credit card debt, and personal loans that have been plaguing you are wiped out in Chapter 7, and you are no longer obligated to repay them.

Chapter 7 is also known as “liquidation bankruptcy” because the process allows the bankruptcy trustee to seize any of your non-exempt property, sell it, and use the proceeds to pay your creditors before discharging any remaining debt. However, with careful application of the right bankruptcy exemptions set out in the law, you may be able to exempt all of your property so that there is nothing left for the bankruptcy trustee to take. At The Law Office of Charles A. May, we help people in Orange County, Los Angeles and across Southern California make their Chapter 7 bankruptcy a “no-asset case,” where you keep all of your property and still get your debts discharged. Learn more about these exemptions below, and call our lawyers to see if we can get you a no-asset bankruptcy discharge and the fresh start you are looking for.

Understanding California Bankruptcy Exemptions

Bankruptcy law is federal law and takes place under the supervision of federal courts, but some states include laws of their own in certain areas. In Chapter 7, the U.S. Bankruptcy Code contains a set of exemptions that protect certain property from the bankruptcy trustee. However, some states have their own exemptions that differ from the federal exemptions and allow you to choose either the federal set or the state’s.

California has its own exemptions that Chapter 7 filers in the state are required to use instead of the federal exemptions. In fact, California has two sets of exemptions debtors can choose from. You cannot mix and match but must choose one set of exemptions over the other. Since there are significant differences between the two groups of exemptions, this is an area where the advice and expertise of a knowledgeable bankruptcy attorney can be especially valuable. Your goal is to achieve a “no-asset” case by exempting the most property possible, so it is imperative to take the time to go through the exemptions with a seasoned professional to choose the right set of exemptions and make the most of them.

California’s bankruptcy exemptions can be found in sections 704.010-704.230 and section 703.140 of the California Code of Civil Procedure. Below is a partial list of exemptions, and amounts are subject to change from year to year.

California Bankruptcy Exemptions – Set One

  • Up to $600,000 of equity in a house or other primary residence, depending on the filer’s marital status, age, county of residence, and other factors
  • Up to $7,500 equity in a motor vehicle
  • Household furnishings, appliances, clothing and other personal effects
  • Up to $3,500 in materials intended for home repair or improvement
  • Up to $8,725 in jewelry, heirlooms, and works of art
  • Reasonably necessary health aids, prosthetics, and orthopedic appliances
  • Up to $8,725 in tools of the trade
  • Certain amounts in deposit accounts such as Social Security
  • Up to $13,975 in unmatured life insurance policies
  • Alimony, support, and separate maintenance reasonably necessary for support

California Bankruptcy Exemptions – Set Two

  • $29,275 of equity in real or personal property used as a residence (house, motor home, etc.)
  • $7,500 equity interest in one or more motor vehicles
  • Up to $725 in household furnishings, household goods, clothes, appliances, books, musical instruments, etc.
  • $1,750 of jewelry
  • $1,550 plus any unused amount of the homestead exemption as a wildcard to exempt anything not otherwise exempted
  • $8,725 for implements, professional books and tools of the trade
  • Any unmatured life insurance contract owned by the debtor, other than a credit life insurance contract
  • Health aids for the debtor, spouse or dependent
  • Public benefits (social security, unemployment, disability, veterans’ benefits, etc.)
  • Alimony, support, or separate maintenance
  • The right to receive payments as crime victim reparations or in a wrongful death judgment or settlement
  • $29,275 for a personal injury judgment or settlement

Call The Law Office of Charles A. May for Help With Bankruptcy

Navigating the bankruptcy exemptions is a critical step in your Chapter 7 bankruptcy, and it is one of the main reasons you want a skilled and knowledgeable bankruptcy lawyer on your side. For help with bankruptcy in Orange County, Los Angeles, or elsewhere in Southern California, call The Law Office of Charles A. May for a free consultation with a compassionate and dedicated bankruptcy attorney.

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