California bankruptcy law offers a number of exemptions that may help you retain property after seeking protection from creditors. These exemptions apply to personal goods, equity in a car or home or items that are used to operate a business. The exemptions apply whether or not an asset is ultimately seized by the trustee overseeing your case.
Car and home exemptions
You are allowed to retain up to $2,300 in positive motor vehicle equity in a bankruptcy proceeding. If you own a single vehicle, you don’t need to make a claim to obtain the exemption. The exemption amount may increase to $4,850 if your vehicle was used for commercial purposes. You may be able to keep up to $175,000 in home equity if certain criteria are met. These criteria include the presence of a person over the age of 65 or the presence of a person who cannot work because of a mental or physical ailment.
Exemptions for personal items
Household furnishings, clothes and similar items are generally exempt from liquidation during a Chapter 7 bankruptcy proceeding. However, this is generally only true if they are deemed to be ordinarily and reasonably necessary to help you maintain a minimum lifestyle. Any items that are used for commercial purposes are typically exempt up to $6,075 and the same is true for art, jewelry or family heirlooms.
If you file for Chapter 7 bankruptcy, you may have some or all unsecured debts eliminated or reduced in a matter of months. Any priority debts such as back taxes owed or child support payments cannot be discharged. While your case is pending, you will likely receive an automatic stay of creditor collection activities such as a lawsuit, foreclosure or repossession.