Bankruptcy Exemptions Under California Law: The Basics

Declaring bankruptcy in California can be a great decision that brings peace of mind and hope to someone beleaguered by debt. It is also a serious decision that requires the professional advice of an attorney that practices California bankruptcy law. Unlike other legal situations, bankruptcy law involves both state and federal statutes, court opinions, rules, and regulations. What results is a complex web of intricate details that must be correctly navigated to bring about the best result possible in a case.

One of those complex areas of bankruptcy laws is the exemptions that apply during a bankruptcy. Generally speaking, when a person declares bankruptcy his property is transferred from his ownership to a bankruptcy estate where it is overseen by a trustee. Then, under applicable laws, the trustee and person declaring bankruptcy try to agree on which assets will be forfeited because of the bankruptcy and which will be retained under the allowable exemptions.

Types and Kinds of Exemptions

Under Federal law, 11 U.S.C. § 522(d), a debtor can exempt certain types of property from bankruptcy proceedings. The federal exemptions include personal retirement accounts, certain real property like a homestead, support or recover payments, and others. With each exemption comes a litany of rules that must be applied to each sought after exemption. The federal exemption scheme allows a state to opt out of its scheme and apply its own exemptions, and this is what California did.

California has its own list of exemptions with rules on how they apply. California’s bankruptcy exemptions can be found in the California Code of Civil Procedure. The laws and rules of California’s exemptions is just as complex and full of detail as the federal system. Under California’s system a debtor must choose between two different systems of exemptions. Under these systems a debtor can exempt:

  • Equity in a home;
  • Personal vehicle;
  • Personal property of a certain nature;
  • A percentage of the wages you make;
  • Retirement or public benefits;
  • Tools needed to work in a trade.

These are not all of the exemptions available, but they represent the majority. Each system has its own rules for how much of an exemption will apply and whether it can be claimed at all. The applicability is fact-based, so it is important to have a professional with experience and who knows what to look for to ensure that every applicable exemptions is granted.

Trusting a Professional to Get it Right

As you can see with this short overview, bankruptcy law in California is very complicated. Just the exemptions systems alone are enough to confuse even the brightest and most intelligent person. This is why it is so important to have a professional California bankruptcy attorney guide your through your bankruptcy process to ensure that it is done right, and to make sure you get all the benefits that the law allows.

At The Bankruptcy Law Center we are a California Bankruptcy Firm. Our attorneys have the experience and knowledge that your case deserves. If you are considering a bankruptcy in California, contact us. We look forward to going over your case with you and providing you with your legal options.

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