Chapter 7 Bankruptcy Exemptions – Homestead

Clients often ask whether they can keep any of their property when filing bankruptcy under Chapter 7. In California, a debtor can choose between two different exemption systems to choose what situation fits them best. The analysis usually begins and ends with the debtor’s home. If the debtor has significant equity in the home prior to filing bankruptcy, they will likely want to claim the larger exemptions under Section 704.730. This sections provides an exemption of $50,000 for a single debtor, $75,000 for heads of household, and $150,000 for disabled individuals or individuals over the age of 65.

Under the other exemption system, the debtor will still have protection for equity in their home up to $20,725. However, this exemption system also provides a wild card exemption to cover other property a debtor may want to exempt. Thus, if the equity in the home is below $20,725, the debtor will likely want to use the exemption system under section 703. While this analysis is a good starting point for determining which exemption to use, there are other considerations one must consider before making the final decision. Contact our office for a free evaluation on which bankruptcy exemption makes sense for you.

This post was written by Benjamin Yrungaray

Benjamin Yrungaray handles bankruptcy and loan modification cases at First Source Law. He is a member of the state bars of California (#256224), Pennsylvania (#208558), and New Jersey. He is also admitted in the Central District Court of California, Southern District of California, and New Jersey District Court.