In the event that some assets are not protected, your attorney can discuss your options. Because there are very strict rules governing the disposal of assets, nobody should transfer or give away their possessions without talking to a bankruptcy lawyer. The ramifications can be difficult for not only yourself but also for those of you who may have innocently accepted that property as well.
California Bankruptcy Exemptions
Bankruptcy is designed to allow filers to have a fresh start. For that reason, California law allows filers to keep enough assets to cover necessities after bankruptcy. These assets are considered “exempt property” and there are laws, called “exemptions” which are used to protect the assets from being distributed to creditors.
Each state has its own list of bankruptcy exemptions. In California, filers can choose between a list of state law exemptions and a list of bankruptcy-only exemptions that mirrors the federal exemptions that were in place when California adopted its bankruptcy law. These are sometimes called “regular exemptions” and “special exemptions,” respectively.
Your California bankruptcy lawyer will help you determine which exemption list is best for your personal situation.
Some of the California state law exemptions are as follows:
- A homestead of up to $75,000 for a single person or $100,000 for a family. The principal residence exemption is higher for disabled individuals or older Californians ($175,000).
- $5,000 in jewelry, family heirlooms or art.
- All reasonably necessary appliances, furnishings, clothes and food.
- Up to $2,300 in equity in motor vehicles.
- Most pensions, health and disability insurance benefits and some life insurance benefits.
- A minimum of 75 percent of wages earned.
- Up to $5,000 in “tools of the trade” used in the course of an occupation.
The bankruptcy-only exemptions are similar, but the dollar limits are different. For example, under the bankruptcy-only list, a homestead is only exempt up to $17,425. A filer gets a higher motor vehicle exemption – up to $2,775 – but it can only be used for one vehicle instead of a combination of vehicles.
California bankruptcy exemptions are different for every person. If you are considering bankruptcy, contact a Los Angeles bankruptcy attorney who can help you understand which assets you can keep.