Exemptions in a California Bankruptcy
June 18, 2020
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.