Anyone in California who begins the process of evaluating whether or not to file for bankruptcy will usually find out quick enough that there are quite a few steps in the process, and that complications can arise easily. Of course, most people know the basic premise of filing for bankruptcy, especially Chapter 7 bankruptcy: liquidate some assets and discharge debt. But, as previous posts here have mentioned, most people who file for bankruptcy may be able to keep some of their assets by filing a "schedule of exempt property."
What are these bankruptcy exemptions? Well, they will typically vary for every different person filing for bankruptcy, but the most common are those that list exempt assets such as retirement savings and a personal vehicle. Many states, including California, have bankruptcy exemptions that differ slightly from the exemptions listed in the federal bankruptcy laws, and people who file for bankruptcy in California will get to choose between the various exemptions.
But, how does an Escondido resident who is filing for bankruptcy know which assets can be listed as exempt and which cannot? It is for approaching these types of difficult questions that our Escondido readers would probably benefit from setting up an exemption plan to fit their own unique financial circumstances.
Filing for bankruptcy is meant to be a path forward for people who have become overly burdened by debt. Going through this process allows Escondido residents to get a fresh start when it comes to their finances. But, determining the proper exemptions is a big part of getting through a bankruptcy filing with maximum benefit.
Source: uscourts.gov, "Chapter 7 - Bankruptcy Basics," Accessed Feb. 13, 2016