What Are California Bankruptcy Exemptions?

How Do California Bankruptcy Exemptions Help?

California bankruptcy exemptions play a big role in both Chapter 7 and Chapter 13 bankruptcy. In Chapter 7 bankruptcy, exemptions help determine how much of your property you get to keep. In Chapter 13 bankruptcy, exemptions help keep your plan payments low. Read on to learn more about California bankruptcy exemptions and how they work.

Bankruptcy Exemptions Can Protect Your Property

Filing bankruptcy does not mean that you have to give up all of your property. Through CA bankruptcy exemptions, you can keep a certain amount of your assets safe in bankruptcy. Many exemptions protect specific types of property, such as a motor vehicle or your wedding ring. Sometimes an exemption protects the entire value of the asset. Other times, an exemption protects up to a certain dollar amount of an asset. Some exemptions, called “wildcard exemptions,” can be applied towards any property you own. If you can exempt an asset, then you don’t have to worry about it being taken or affecting your bankruptcy.

A Chapter 7 is a liquidation bankruptcy where the appointed trustee is looking to sell off your assets to pay your creditors. However, the bankruptcy trustee cannot sell any property you are able to exempt. This is how bankruptcy exemptions help you to protect your assets in a Chapter 7 bankruptcy. For example, if your state has a $5,000 motor vehicle exemption and you only have one car worth $4,000, then you can keep it.

Exemptions Help Keep Chapter 13 Plan Payments Low

A Chapter 13 bankruptcy allows you to keep all your property and reorganize your debts. However, the amount you must pay certain creditors still depends on how much property you can exempt. The value of any nonexempt assets must be paid to your non-priority unsecured creditors (such as credit card issuers) in your bankruptcy. So in a Chapter 13, exemptions help keep your plan payments low by reducing the amount you are required to pay creditors.

To learn more about California exemptions, see Homestead Exemption California

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At the Law Office of Hindley & Henderson Law, we take great pride in educating our clients – empowering you to fully understand your options and working with you every step of the way. Our bankruptcy attorneys have over 30 years experience helping individuals and business use bankruptcy to reorganize their debt and get a fresh start. Do you have more questions specific questions?  For more information, contact Hindley & Henderson today.