Any of our Escondido readers who are familiar with previous posts here may know that when a person files for bankruptcy there are certain bankruptcy exemptions that will come into play. But, what they may not know is that sorting through the various options under the applicable California bankruptcy exemptions can be quite difficult. That is why it is important to sit down and come up with a comprehensive exemption plan.
In doing so, Escondido residents will need to know the difference between exempt assets and non-exempt assets. First, what does "exempt" mean? This term refers to the assets that belong to the bankruptcy filer that will not be part of the bankruptcy liquidation process under Chapter 7. The filer will be allowed to keep exempt assets, even though other assets may need to be turned over to the bankruptcy trustee in order to be liquidated. Exempt assets will most commonly include those assets that are deemed necessary to the filer's ability to live and make a living. As a result, most California residents will use a car exemption for at least one car needed for transportation, as well as exemptions to cover tools used in the person's chosen trade.
However, there are other items of property that can fall within an exemption, up to a certain value. In fact, some people who are filing for bankruptcy may be able to keep their home with the right exemptions, as well as certain items of jewelry and retirement savings.
Non-exempt assets, on the other hand, must be turned over during the bankruptcy process. Items that fall within this category would likely include any valuable collections, second cars or homes and any other expensive or valuable items that are not necessary for the filer to live.
Source: FindLaw, "Exempt vs. Non-exempt Property Under Chapter 7," Accessed Nov. 7, 2015