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Exemptions in a California Bankruptcy

Identifying Bankruptcy Exemptions in Long Beach, CA

California has opted out of the federal bankruptcy exemptions. Instead, California has 2 sets of bankruptcy exemptions in Sections 703 and 704, which debtors must choose one of when filing for Chapter 7 bankruptcy. The following is a selective summary of both sets of exemptions. There are other exemptions under each section which may apply to your individual situation. Note: Some exemptions, including the homestead, are subject to federal restrictions.

California's Homestead Exemption (§704)

  • Protections under California's Homestead Exemption include:

  • $75,000 Homestead exemption for an individual filer

  • $100,000 Homestead for a family unit

  • $175,000 for elderly individuals aged 65 and over or disabled individuals

  • $3,325 for a motor vehicle

  • Retirement accounts

  • Reasonable and necessary personal property

Insurance

  • Disability or health benefits

  • Fraternal unemployment bonds

  • Life insurance proceeds or avails if clause prohibits proceeds from being used to pay beneficiary's creditors

  • Fidelity bonds

  • Homeowners' insurance proceeds for 6 months after received, up to the homestead exemption amount

  • Matured life insurance benefits needed for support

  • Unmatured life insurance policy § 704.100

  • Unmatured life insurance policy loan value to $13,975 (husband and wife may double)

Miscellaneous

  • Business or professional license, except liquor licenses

  • Trust funds of incarcerated inmates up to $1,750

Pensions

  • County employees

  • County firefighters

  • County peace officers

  • Private retirement benefits, including IRAs and KEOGHs (Traditional and Roth IRAs to $1,095,000)

  • Public employees

  • Public retirement benefits

Personal Property

  • Appliances, furnishings, clothing, and food to the extent ordinary and necessary

  • Direct bank deposits from Social Security Administration to $ 3,500 ($ 5,250 for two or more depositors)

  • Bank deposits from other public benefits to $1,750 ($2,600 for two or more depositors)

  • Building materials to $3,500 to repair or improve home (spouses may not double amount)

  • Burial plot

  • Health aids

  • Jewelry, heirlooms, and art to $8,725 total (may not be doubled).

  • Motor vehicles to $3,325 (may not be doubled)

  • Personal injury causes of action, up to reasonable amount for support

  • Personal injury recoveries needed for support; if receiving installments at least 75%

  • Wrongful death causes of action

  • Wrongful death recoveries needed for support; if receiving installments, at least 75%

  • Funds held in escrow

Public Benefits

  • Aid to blind, aged and disabled

  • Financial Aid to Students

  • Relocation benefits

  • Union benefits due to a labor dispute

  • Unemployment benefits

  • Worker's Compensation

Tools of Trade

  • Tools, implements, materials, instruments, uniforms, books, furnishings, equipment, vessel, motor vehicle to $8,725 total; to $17,450 total if used by both spouses in same occupation (cannot claim motor vehicle under both tools of trade exemption and motor vehicle exemption).

  • Commercial Vehicles to $4,850 ($9,700 if used by spouses in the same occupation)

Wages

  • Public employee vacation credits; if receiving installments, at least 75%

  • 75% of wages paid within 30 days of filing for bankruptcy certain exemptions apply

Wild Card

  • None

Non-Homestead (§703)

  • $29,275 Wildcard exemption (used for any purpose)

  • $5,850 for motor vehicles

  • Most retirement accounts

  • $725 per household item

Insurance

  • Disability or health benefits

  • Life insurance proceeds or avails needed for support

  • Unmatured life insurance contract accrued interest, dividend loan value to $15,650

  • Unmatured life insurance policy other than credit life insurance contract

Miscellaneous

  • Alimony, child support to the extent necessary for the support

Pensions

  • ERISA qualified benefits needed for support

  • Tax-exempt retirement accounts

  • Traditional and Roth IRAs to $1,095,000

Personal Property

  • Animals, crops, appliances, furnishings, household goods, books, musical instruments and clothing to $725 per item

  • Burial plot to $20,725, in lieu of homestead

  • Health Aids

  • Jewelry to $1,750

  • Motor vehicle to $5,850

  • Personal injury recoveries to $29,275 (not to include pain and suffering or pecuniary loss)

  • Wrongful death recoveries needed for support

Public Benefits

  • Crime victims' compensation.

  • Public Assistance

  • Social Security

  • Unemployment benefits

  • Veterans' benefits

Tools of Trade

  • Implements, books, and tools of the trade to $8,725

Wages

  • None

Wild Card

  • $1,550 of any property plus any unused portion of homestead or burial exemption

A debtor can use the exemptions found in Sections 703 or 704 of the California Code of Civil Procedure, provided that the debtor has lived in California for the 730 days preceding the filing of the bankruptcy. If the debtor has not lived in California for the last 730 days preceding the filing, the test is whether the debtor lived the majority of the 180 days preceding that 730 day period in California. The legislature can change the exemptions at any time. Please call our office to make sure you have the latest information.

To discuss your case thoroughly, we encourage you to contact our Long Beach bankruptcy attorney at your earliest convenience.