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What can you keep if you file for bankruptcy in California?

On Behalf of | Apr 29, 2021 | Chapter 13, Chapter 7, Personal Bankruptcy

Filing for bankruptcy does not mean you have to start from scratch. California residents who decide to claim bankruptcy can keep exempt property listed on their choice of one of the state’s two property exemption allowance lists: 704 exemptions or 703 exemptions.

Review the common property exemptions for those struggling with unpayable debt.

Homestead exemption

Homeowners tend to choose the 704 property exemptions because you can keep up to $75,000 in equity in your primary home, which increases if you share the home with someone else, have a disability, are older than 65, or meet certain other requirements and face foreclosure.

With the 703 property exemptions, you can keep up to $29,275 in home equity.

Motor vehicle exemption

Under 704, you can retain up to $3,325 in equity in your car, truck, motorcycle or vehicle. The 703 property exemptions allow you to keep up to $5,850 in motor vehicle equity.

Other property exemptions

Both sets of exemptions allow you to keep personal items such as clothing as well as household items such as furniture and appliances. However, the 703 exemptions limit the value to $725 per item, or $1,750 for jewelry.

All bankruptcy filers can keep medical devices, personal injury and wrongful death recovery, a burial plot, qualifying retirement accounts and pensions, unemployment compensation, and public benefits. However, the limits on these exemptions vary depending on whether you select the 704 or the 703 exemptions.

Not every bankruptcy court accepts the 703 exemptions. When making this decision, carefully review both lists to determine the appropriate fit for your financial situation.