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California Bankruptcy Exemptions

The Bankruptcy Code allows each individual who files for bankruptcy to keep basic assets that are necessary for the debtor’s “fresh start” after bankruptcy. The property is called the debtor’s “exempt property.” Each state has its own list of property that can be exempt. California gives debtors a choice between the state law exemptions found in Code of Civil Procedure section 704 and a set of bankruptcy-only exemptions in Code of Civil Procedure section 703.140 that mirror the Bankruptcy Code exemptions that were in the federal law when the California law was adopted. Federal bankruptcy exemptions are not available in California.

The following are the California State Law Exemptions:

  1. Deposit Accounts and FEMA Benefits – (CCP 704.225; CCP 704.220; CCP 704.230).
    – Deposit accounts (effective January 1, 2020) – If necessary for the support of the judgment debtor, as well as the judgment debtor’s spouse and dependents. Exempt an entire account balance.
    – Deposit accounts (effective September 1, 2020) – A debtor can protect “…an amount equal to or less than the minimum basic standard of adequate care for a family of four…,” or $1,724 under current standards. This exemption is automatic and a debtor does not need to assert it for it to apply.
    – FEMA benefits (effective January 1, 2020)—all funds received from FEMA. This exemption is automatic and a debtor does not need to assert it for it to apply.
    – Bank deposits arising out of Social Security payments up to $3,500 for a single payee ($5,250 for husband and wife payees) and unlimited if funds are not commingled; bank deposits from other public benefit payments up to $1,750 ($2,600 for husband and wife as joint payees) – 704.080.
  2. California Homestead Exemption – CCP 704.730.
    – Under the State exemptions, debtors can exempt real or personal property that they reside in at the time of filing for bankruptcy, including a mobile home, boat, stock cooperative, community apartment, planned development or condominium).
    – $75,000 if single and not disabled
    – $100,000 if the filer and at least one family member have an interest in the homestead – $175,000 if 65 or older or if physically or mentally disabled; 55 or older, single and earn under $25,000 per year, or 55 or older, married and make under $35,000 per year.
  3. California Motor Vehicle Exemption – CCP 704.010.
    – The motor vehicle exemption protects equity in your car, truck, motorcycle, or another vehicle up to $3,325.
  4. Household items and personal effects – CCP 704.020.
  5. Residential building materials to repair or improve home up to $3,500 – CCP 704.030.
  6.  Jewelry, heirlooms, and works of art up to $8,725 – CCP 704.040.
  7. Health aids – CCP 704.050.
  8. Personal injury and wrongful death causes of action and recoveries necessary for support – (CCP 704.140; CCP 704.150).
  9. Cemetery and burial plot – CCP 704.200.
  10. Wages – (CCP 704.070; 704.113).
    – 75% of wages paid within 30 days before filing bankruptcy
    – Public employee vacation credits
  11. Retirement & Pensions – (11 U.S.C. § 522; 11 U.S.C. § 522(b)(3)(C)(n); CCP 704.110; CCP 704.115; Cal. Gov’t Code § 21255; Cal. Gov’t Code § 31452; Cal. Gov’t Code § 31913; Cal. Gov’t Code § 32210).
    – Tax-exempt retirement accounts (including 401(k)s, 403(b)s, profit-sharing, and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans)
    – IRAS and Roth IRAs – the exemption is limited to a total value of $1,171,650 per person for all accounts held by the debtor.
    – Public retirement benefits
    – Private retirement plans and benefits, including IRA and Keogh
    – Public employees
    – County employees
    – County peace officers
    – County firefighters
  12. Public Benefits – (CCP 704.120; CCP 704.160; CCP 704.170; CCP 704.180; CCP 704.190).
    – Unemployment and disability benefits, and union benefits due to labor disputes -.
    – Workers’ compensation benefits
    – Public assistance benefits
    – Relocation benefits
    – Student financial aid
  13. Tools of Trade – CCP 704.060.
    – Tools, implements, materials, books, uniforms, instruments, one commercial vehicle, equipment, and furnishings up to $8,725 total, or up to $17,450 if used by both spouses in the same occupation.
  14. Insurance – (CCP 704.100; CCP 704.130; CCP 704.720; Cal. Labor Code § 404; Cal. Insurance Code § 10132, 10170, 10171).
    – Matured life insurance benefits needed for support of unlimited value, or unmatured life insurance policy up to $13,975 -.
    – Disability or health insurance benefits
    – Homeowner insurance proceeds for six months after received, up to the amount of homestead exemption
    – Fidelity bonds
    – Life insurance proceeds if policy prohibits use to pay creditors

The following are the California Bankruptcy-Only Exemptions:

  1. California Homestead Exemption – CCP 703.140(b)(1).
    – $29,275 for real or personal property used as a residence
  2. Motor Vehicle Exemption
    – Up to $5,850 of equity in motor vehicles
  3. Burial plot – 703.140(b)(1).
    – Up to $29,275 instead of the homestead exemption
  4. Clothing, household goods, appliances, furnishings, animals, books, musical instruments, and crops – 703.140(b)(3).
    – Up to $725 per item
  5. Jewelry – 703.140(b)(4).
    – Up to $1,750
  6. Health aids – 703.140(b)(9).
  7. Wrongful death recoveries needed for support – 703.140(b)(11).
  8. Personal injury recoveries – 703.140(b)(11).
    – up to $29,275
  9. Retirement & Pensions – (11 U.S.C. § 522; 11 U.S.C. § 522(b)(3)(C)(n); CCP 703.140(b)(10)).
    – Tax-exempt retirement accounts (including 401(k)s, 403(b)s, profit-sharing, and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans)
    – IRAS and Roth IRAs
    – ERISA-qualified pension, annuities, and benefits necessary for support
  10. Public Benefits- 703.140(b)(10).
    – Unemployment compensation
    – Social Security,
    – Veterans’ benefits
    – Public Assistance
  11. Crime victims’ reparation benefits – 703.140(b)(11).
  12. Tools of Trade – 703.140(b)(6).
    – Tools, books, and implements of trade up to $8,725
  13. Alimony & Child Support – 703.140(b)(10).
    – Alimony and child support necessary for support
  14. Insurance – (703.140(b)(7); 703.140(b)(8)).
    – Unmatured life insurance policy, other than credit
    – Unmatured life insurance accrued interest, dividends, loan, cash, or surrender value up to $15,650
  15. Disability benefits – 703.140(b)(10).
  16. Loss of future earnings payments needed for support – 703.140(b)(11)(E).
  17. Wildcard – 703.140(b)(5).
    -$1,550 plus any unused amount of burial or homestead exemption in any property, which is currently $30,825 in total if the debtor doesn’t use the homestead exemption.
To learn more, contact our offices at (949) 450-8500 for your FREE consultation.
Paul’s ability to (a) re-think his strategies in the face of the actions of the opposition and some of the earlier decisions of the bankruptcy court together with (b) Paul’s work ethic led to some great wins which changed my life back for the better.

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IRVINE, ORANGE COUNTY, CA
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