What Property You Can Keep After Bankruptcy
What Property You Can Keep After Bankruptcy
Chapter 7 bankruptcy is commonly referred to as “liquidation bankruptcy,” since some people must give up certain property and assets to be liquidated by the bankruptcy trustee as part of the process. However, this does not mean you will lose all of your property, as many people fear might happen. In fact, some filers are able to keep most if not all of their property with the help of a skilled California bankruptcy attorney. You should not hesitate to call Miranda, Magden & Miranda, LLP, to discuss the implications of a possible bankruptcy case today.
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Exemptions to Protect Your Property
The good news is that the law does not aim to take everything away from Chapter 7 bankruptcy filers. For this reason, the law sets out exemptions that you can apply to protect certain property and assets. In California, you must use the exemptions set out by state law, as our state does not allow you to use federal exemptions.
California has two sets of exemptions you can choose between, and System 1 (also known as 704 exemptions) can protect:
- Funds in deposit accounts that are necessary to support the filer
- All benefits received from FEMA
- $75,000 worth of equity in a residence if single; $100,000 of equity if two household members have interests in the home; $175,000 of equity if you are disabled, 65 or older, or 55 and older facing foreclosure with low income
- $3,325 of equity in a motor vehicle
- Personal and household items
- Materials to improve or repair residential property
- Health aids
- Recovery on a personal injury or wrongful death judgment
- Art, heirlooms, and jewelry up to $8,725
- Cemetery and burial plot
- Public benefits
- 75 percent of wages earned during the 30 days prior to filing bankruptcy
- Insurance benefits
- Retirement plans and accounts
- Tools of your trade up to $8,725 for one filer and $17,450 if both spouses use the tools
- Professional and business licenses
- Property of a business partnership
System 2 (known as 703 exemptions) is not permitted in every bankruptcy court. Your attorney can advise you whether using System 2 is a possibility and whether it would be beneficial to your case. System 2 exemptions include:
- $29,275 in home equity of your residence
- $5,850 for a motor vehicle
- $725 per item of certain household goods
- Health aids
- Personal injury recovery up to $29,275 and wrongful death recovery
- $1,750 of jewelry
- Public benefits
- Retirement accounts
- Tools of trade up to $8,725
- $1,550 as a wildcard exemption, plus any amount of a homestead exemption not needed
Learn How a California Bankruptcy Lawyer Can Help
As you can see, California law allows you to protect a significant amount of property and assets, so you should not worry that you will lose everything if you seek financial relief through Chapter 7 bankruptcy. The legal team of Miranda, Magden & Miranda, LLP is ready to help, so please contact us today for more information.
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