California Bankruptcy Laws
The bankruptcy process is protected by federal and state laws. Bankruptcy laws differ by state and can be somewhat complicated. Before you decide to file bankruptcy, be sure you have all the information about how the laws in your state will affect you. Speak with a local bankruptcy attorney to find answers. If you complete the free form below, you can get a free case evaluation with a lawyer near you.
Filing for bankruptcy in California is the final resort for those struggling with debt. Before filing for bankruptcy, understand a little about California bankruptcy laws.
California Bankruptcy Exemptions
The state of California’s bankruptcy code has two sets of bankruptcy exemptions. Under the first, you may keep the following:
- Your home, provided there is not more than $50,000 in equity, or $75,000 in equity for a family
- Up to $2,700 in building materials for your home
- Up to $6,750 for jewelry, heirlooms and art
- Up to $2,550 in equity for your vehicle
- Health aids
- Burial plots
- Alimony, retirement plan proceeds and life insurance proceeds
- Unemployment or other government benefits
- Property of a business partnership
- Up to $2,700 in bank deposits from Social Security
- Up to $6,50 for tools of the trade
Filing for bankruptcy in California is the final resort for those struggling with overwhelming debt. Before filing for bankruptcy, understand a little about California bankruptcy laws.
Exemptions
The state of California’s bankruptcy code has two sets of bankruptcy exemptions. Under the first, you may keep the following:
Under the second bankruptcy plan, you may take the following exemptions:
- Your home, provided it has less than $17,425 in equity
- Up to $2,775 in equity for your vehicle
- Up to $1,150 for jewelry
- Up to $450 per item for furniture, appliances, books and musical instruments
- Public benefits and alimony
- Up to $17,425 for a burial plot on place of the home exemption
- Retirement plans
- Life insurance proceeds
- Health aids
- Up to $1,750 for tools of the trade
- Up to $925 as a wild card exemption, which applies to any property
California Chapter 7 Bankruptcy Law
Debtors looking to erase their debts usually choose to file Chapter 7 bankruptcy. This form of bankruptcy is designed to allow the court to sell assets to pay off creditors. Once all non-exempt assets are sold, the debts are erased. Federal and California bankruptcy law require debtors to pass a means test before filing Chapter 7. In order to qualify for Chapter 7, you cannot make more than the median income in California.
California Chapter 13 Bankruptcy Law
Under Chapter 13 bankruptcy, debts are not erased. The court and trustee reorganizes the debts to give the debtor a better chance of successfully paying them off. This typically stops collections calls and legal actions while the debtor works on paying down the debt. It also usually allows the debtor to reaffirm certain loans, like mortgages and car loans, in an attempt to keep those assets.
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