You Will Not “Lose Everything”
The majority of people who file for personal bankruptcy in California keep all or most of their assets, including their home, vehicles, retirement savings and household possessions.
Whether you will forfeit any property depends on which type of bankruptcy you file and the nature of your assets. The Hedtke Law Firm will analyze your assets and apply the appropriate exemptions to retain as much of your estate as possible under the law.
Find Out What Assets You Can Keep
We can explain the exemptions that apply to your assets in a free initial consultation at one of our three offices in Southern California:
West Covina • Upland • Moreno Valley
California Bankruptcy Exemptions
As a general rule, a Chapter 13 bankruptcy protects virtually all of your assets because you are repaying at least some portion of your debts, and Chapter 7 protects most of what you own but may require you to sacrifice some assets to discharge debts.
The following property is just a portion of property protected under California’s exemptions:
- Your home — Up to $100,000 in equity is protected if you are married and living at your home, the exemption can be higher if you are disabled, over the age of 55 and on limited income or over the age of 65.
- One vehicle per household up to $5,350 in equity. A married couple living together cannot exempt two vehicles, but may be able to retain a second vehicle by paying for it over time in a Chapter 13.
- Household goods — Your clothing and bedding, furniture and appliances, heating and cooling equipment, kitchenware, sewing machine, therapeutic equipment and other goods are exempt, up to a limit.
- Wedding/engagement rings — Up to $5,000 in value.
- Retirement accounts — Generally, all pensions, 401(k), 403(b), ERISA plans, IRA and Keogh plans and other qualified retirement plans are 100 percent protected.
- Tools of a trade — You can retain equipment necessary for you or your spouse’s livelihood such as mechanic’s or carpentry tools, instruments, books, and one utility trailer.
- Life insurance/annuities — The cash value of life insurance and the payments under annuity contracts are generally exempt.
- Miscellaneous exemptions — There are many other exemptions for such things as firearms, musical instruments and family portraits. We can determine if a certain item is exempt or not.
What Assets Are Not Exempt?
If you own your home outright or it is mostly paid off, the excess equity above $100,000 is not protected in a Chapter 7. Equity in a second home or rental property is not exempt. You cannot keep cash and savings accounts in a Chapter 7. Although most of your household possessions are protected, most electronics are not exempt — this includes TVs, stereos and DVD players; however, Chapter 7 Trustees rarely take such items. You can protect nonexempt items by paying their market value as part of your Chapter 13.
Our attorneys will review everything you own and help you look at the “big picture.” Is it worth it to forfeit some property in Chapter 7 in order to discharge thousands or tens of thousands of dollars in debt? Or are you better off filing Chapter 13 to protect certain assets while paying only what you can actually afford of the unsecured debt.
Contact the Hedtke Law Firm
Call us toll free at 626-593-1556 to arrange your free consultation about debt relief and asset exemptions.