Does an individual filing a California bankruptcy use the federal exemptions or the California exemptions?

In California, a person filing for bankruptcy may choose to use either the federal exemptions, set by the federal Bankruptcy Code, or the California exemptions set by state law. Further, a debtor filing for bankruptcy may also choose from one of two sets of state exemptions, depending on his or her circumstances.

The California Bankruptcy Exemptions

Both sets of California exemptions focus on various values under the categories of homestead, pensions, personal property, public assistance/ payments, insurance, and professional tools.

• Those who choose the first set of exemptions receive, most notably, a large exemption for the homestead value, with a total limit of $50,000 for individuals who are filing and own the property, or up to $75,000 for family-owned property.

This set of exemptions is generally chosen more often and is similar to the exemption processes in other states. It should especially be considered by married couples, because it makes allowances for the fact that two people are involved by raising the maximum value amounts in each category. The second set of California exemptions does not do this; it makes no distinction between married couples and individuals.

• In Set 2, however, those who do not own their homes may benefit more, since this exemption set allows those people to take some of the value they would have otherwise exempted from the homestead category, and apply it in other areas in order to receive higher-value exemptions on personal property and other categories.

When Do Bankruptcy Exemptions Apply?

Bankruptcy exemptions apply primarily in a Chapter 7 bankruptcy, when the debtor is required to turn over a great deal of his cash, as well as any assets he may have. In a Chapter 13 bankruptcy, on the other hand, surrendering assets for sale is not required. 

Getting Help with California Bankruptcy Exemptions

For assistance in determining if Chapter 7 bankruptcy is right for you, and for help choosing the proper exemptions to take, it is advisable to speak with an experienced California bankruptcy attorney as quickly as possible.