As worried as some Escondido residents might be about some of the negative effects of a bankruptcy filing, the reality is that there are parts of the process that are designed to ensure that a person is not left stripped of all possessions in exchange for the discharge of debt. Chapter 7 bankruptcy, in particular, which is known as "liquidation" bankruptcy, may place Escondido residents in fear of losing it all. But, there are bankruptcy exemptions in every case.
However, even though a person who files for bankruptcy will be able to take advantage of certain bankruptcy exemptions, there are dollar amounts that play an important role. For instance, when it comes to the car exemption, the dollar limit is $2,300. For items used to repair and maintain the person's primary residence, the dollar limit is $2,425. The jewelry exemption limit is $6,075, which covers heirlooms and works of art in addition to jewelry. The "tools-of-trade" exemption is limited to $6,075.
When an Escondido resident is beginning to think about filing for bankruptcy, an exemption plan is crucial. Anyone who is filing for bankruptcy will need to know what assets they will be entitled to keep, even as the bankruptcy trustee takes other assets to sell off and use the proceeds to pay off debt.
Filing for bankruptcy can be as much about asset protection as it is about discharging debt. Sure, some people may have accumulated too much debt to pay off, but they also work hard to earn a retirement savings, and they need certain basic assets just to get back on their feet after the bankruptcy process is complete.
Source: leginfo.ca.gov, "CODE OF CIVIL PROCEDURE SECTION 704.010-704.210," Accessed July 23, 2016