When you have hit a financial meltdown, bankruptcy may be your only hope for a fresh start. With the proper filing, you can straighten up your finances and keep the things you need to work and live. Before you file for bankruptcy, it is imperative that you hire an experienced Stockton bankruptcy attorney to explain the process and ensure you do everything right. There are a lot of legal nuances when it comes to bankruptcy proceedings.
California “Exemption Laws” Only Protect Essential Property
Although bankruptcy is a federal process and works the same in every state, some states, like California, have their own exemption laws. California, unlike most states, offers two choices when it comes to bankruptcy exemptions. This makes it imperative to carefully review each list with your Stockton bankruptcy attorney and compare it to the property you own because you cannot use exemptions from both lists. You are only allowed to use the federal non-bankruptcy exemptions along with the ones the state sets.
The most important thing to remember is that California “exemption laws” protect essential property only, not unnecessary luxury goods. To make the most informed decision, you need to learn about:
- How to choose between California’s two exemption systems
- What will happen to property you cannot protect with an exemption, and
- Whether you have resided in the state for the required time to use California’s bankruptcy exemptions
California 703 v. 704 Bankruptcy Exemptions
Although a Stockton bankruptcy attorney is in the best position to help you protect your assets in bankruptcy, below is an overview and comparison of the two exemptions allowed under California state law.
| California 703 Bankruptcy ExemptionsAmounts adjust on April 1, 2025. Spouses cannot double exemptions. | California 704 Bankruptcy ExemptionsAmounts adjust on April 1, 2025. Spouses cannot double exemptions unless noted. | |
| Homestead Exemption | $31,950 for real or personal property used as a residencecan be used for a burial plotCCP § 703.140(b)(1) | $600,000 for real or personal property filer occupiescan apply to a mobile home, boat, stock cooperative, community apartment, planned development, or condominiumCCP § 704.730 |
| Motor Vehicle Exemption | $9,525CCP § 703.140(b)(6) | $9,525additional $9,525 for spouse in the same business$4,850 of the exemption amount can be applied to a commercial vehicleCCP § 704.060 |
| Wildcard Exemption | $1,700, andany unused homestead exemption amount ($31,950 available if homestead exemption isn’t used)CCP § 703.140(b)(5) | none |
| Personal Property Exemptions | $800 per item for clothing, household goods, appliances, furnishings, animals, books, musical instruments, and crops$1,900 in jewelryhealth aidswrongful death recovery needed for support$31,950 personal injury recoveryAlimony and child support needed for supportCCP §§ 703.140(b)(3),(4),(9) – (11) | food, clothing, appliances, and furnishings$3,825 in building materials to repair or improve home$9,525 in jewelry, heirlooms, and arthealth aids$1,826 in a bank account (spouses can double; amount valid as of July 1, 202 and adjusts yearly)all Social Security payments if not commingled with other funds; otherwise, $3,825 ($5,725 joint payees)all other public benefit payments if not commingled with other funds; otherwise, $1,900 ($2,825 joint payees)personal injury and wrongful death causes of actionpersonal injury and wrongful death recoveries needed for supportburial plot75% of wages paid within 30 days before bankruptcy filing$1900 inmate trust accountpublic employee vacation creditsFEMA benefitsCCP §§ 704.020 – 704.050; 704.070; 704.080; 704.090; 704.113; 704.140; 704.150; 704.200; 704.230 |
| Retirement Account Exemptions | individual retirement accountpension, profit-sharing, stock bonus, or another ERISA-qualified plantraditional, SIMPLE, or Roth IRAmore protections in “Federal Nonbankruptcy Exemptions” belowMich. Comp. Laws §§ 600.6023(1)(j),(k); 11 U.S.C. § 522 | private retirement benefits, including IRAs and Keoghspublic retirement benefitsmore protections in “Federal Nonbankruptcy Exemptions” belowCCP §§ 704.010; 704.115 |
| Public Benefit Exemptions | unemployment compensation, Social Security, Veterans’ benefits, and public assistancecrime victims’ reparation benefitsCCP §§ 703.140(b)(10),(11 | public assistancestudent financial aidrelocation benefitsunemployment benefitsunion labor dispute benefitsworkers’ compensationCCP §§ 704.105; 704.120; 704.160 – 704.190 |
| Insurance Benefit Exemptions | unmatured life insurance policy$17,075 interest and dividends in an unmatured life insurance contractdisability benefitslife insurance payments needed for supportCCP §§ 703.140(b)(7),(8),(10),(11) | matured life insurance benefits needed for support of unlimited value$15,250 in an unmatured life insurance policyfraternal unemployment benefitsdisability or health benefitsfraternal benefit society benefitsCCP §§ 704.010 – 704.130; 704.170 |
Call an Experienced Stockton Bankruptcy Attorney
If you are considering Chapter 7 bankruptcy, it is in your best interest to consult with an experienced bankruptcy attorney to help you learn your legal rights and options, especially with respect to Chapter 7 bankruptcy.
For more information or to schedule a complimentary consultation with Central Valley bankruptcy attorney Gurjit Srai, please call 209-323-5558, or complete our online form.