On April 1, 2016, residents of California filing Bankruptcy will have an increase in exemptions to protect their assets.  In a Chapter 7 Bankruptcy, the amount of exemption available determines how much assets you will be able to keep.  For those filing Chapter 13 Bankruptcy, it determines the amount of your monthly payment to your unsecured, non-priority creditors.

The exemption amounts change every three years to adjust for the cost of living.  The next change will not be until April 1, 2019.

California has two exemptions, CCP 703 and CCP 704, used in Bankruptcy to protect your assets.  You can only pick one over the other.  There is no mixing.  There is no doubling of exemptions for married couple.

If you resides in California for at least 2 years and you are filing Bankruptcy, you must apply the California exemption.  It does not matter if live in Elk Grove, Roseville, Rocklin, Modesto, Jackson, Woodland, Yuba City, Marysville, Davis, or other cities throughout California.

CCP 704 is useful for those with a lot of equity in their home.  How much equity you can exempt from you home depends on household, disability, age, and income:  $75,000 if single and not disabled; $100,000 if family and at least one family member has no interest in the homestead; $175,000 if 65 or older or if physically or mentally disabled; $175,000 if creditors are seeking to force the sale of your home and you are either (1) 55 or older, single and earn under $25,000 per year, or (2) 55 or older, married and earn under $35,000 per year.

CCP 704 protects other properties as well.

Motor vehicles for $3,050.00

unmatured Life Insurance (loan value) for $12,800.00

Jewelry, Heirlooms, Works of Art for $8,000.00

Call Sacramento Bankruptcy Attorney Muoi Chea for more information.

If you do not own a home or have very little equity, you might choose CCP 703.  CCP 703 has what is called the "wild card exemption" that combines the exemptions amount of CCP 703.140(b)(1) and CCP 703.140(b)(5); that is, unused exemption for homestead of up to $26,800.00 (CCP 703.140(b)(1)) plus $1,425.00 (CCP 703.140(b)(5).

The wild card exemption can be used to protect any assets (cash, bank accounts, boat, etc.) that is not otherwise protected by the other sections of CCP 703.  For example, CCP 703.140(b)(2) provides up to $5,350.00 exemption towards equity of your car.  However, if the equity in your car is $10,000, that will not be enough.  You will have to apply the wild card exemption to protect the excess $4,650 equity in your car.

Here are some examples of the common exemptions under CCP 703:

Homestead or burial plot for $26,800.00

Personal bodily injury payments for $26,800.00

Tools of trade and professional books for $8,000.00

Jewelry for $1,600.00

unmatured Life Insurance for $14,325.00

Household goods per item for $675

There are more to the list.  The above are just the most common.  If you have assets valued at more than what the California exemption 703 or 704 can protect, you should consider filing a Chapter 13 Bankruptcy if you want to keep your assets.

For more information, schedule a bankruptcy consultation with Muoi Chea at Bankruptcy Attorney Offices in Sacramento, Stockton, or Fairfield, CA.