Most Monterey County families live hand to mouth. Roughly half of the families in Central California cannot afford to pay a $400 emergency expense. They are barely staying afloat. One financial storm, such as a temporary job loss or a divorce, is usually enough to force people under the waves. So, many people are drowning in debt, and their circumstances are usually not their fault.
In times like these, you need a diligent lawyer on your side. That is the kind of lawyer you will find at Miranda, Magden & Miranda, LLP. Beginning from day one, we move your case through California’s highly-complex bankruptcy system. Literally, overnight, angry creditors cease adverse actions, like repossession and foreclosure. As a matter of fact, they cease all communications. Then, at the end of the case, the judge discharges many of your debts. All this relief comes at relatively little cost.
Exempt Assets in California
While some people fear that declaring bankruptcy will cause them to lose all their assets, that is purely a myth. In California, most assets are exempt. The trustee (a person who oversees the bankruptcy for the judge) cannot seize exempt assets to pay off the debtor’s outstanding obligations.
The Golden State is an opt-out jurisdiction, so debtors must use California’s rather complex two-tier exemption system. The amounts vary, but the categories are basically the same. Some common Tier One and Tier Two exemptions include:
- House: Most debtors may exempt between $25,000 and $150,000 in home equity. Note that equity is different from fair market value. Assume Tom lives in a $300,000 house and he still owes $275,000 on the mortgage. Under any California exemption system, the trustee would be unable to take his house.
- Motor Vehicle: The same fair market value/equity principle applies here. Most new cars have a high value but no equity; most used cars have considerable equity but practically no value.
- Personal Property: The personal property exemption varies considerably in the two tiers. But most personal effects, like furniture, clothes, and jewelry, are fully protected. The personal property exemption may also apply to cash in a savings account and up to 75% of the debtor’s current wages.
Both these tiers have pros and cons. For example, the Section 704 homestead exemption is larger, but the motor vehicle exemption is smaller than it is in Section 703. The amount of time the debtor has lived in California may also affect the 703/704 selection.
Dischargeable Debts in Soledad
California’s exemption laws are debtor-friendly, and so are the discharge laws. In most cases, both Chapter 7 and Chapter 13 discharge unsecured debts like:
- Medical bills,
- Credit cards, and
- Some types of government debt, including older back income taxes.
Some advanced discharge options might be available, as well. Let us return to Tom’s house. Assume he also has a $50,000 home equity line of credit loan in addition to his first mortgage. So, he owes a total of $325,000, but the house is only worth $300,000. As a result, part of the HELOC is unsecured, and the judge may discharge the unsecured portion. That could save Tom hundreds of dollars a month.
Count on Tenacious Attorneys
Bankruptcy’s fresh start means asset retention and debt elimination. For a confidential consultation with an experienced bankruptcy lawyer in Soledad, contact Miranda, Magden & Miranda, LLP. Initial consultations in Bankruptcy are provided free of charge.