How To Protect Your Stuff
If you are worried about your bank account, your car, your wine collection or any other valuable, it is important that you understand that the court does NOT want to take away everything you have in order for you to file bankruptcy. Under California law you get to keep at least $30, 800 worth of anything you want, and often you can keep more than that in retirement accounts, household goods, etc. This is possible through the use of California exemptions under California Civil Codes §703 and §704. Which code you use generally depends on if you own a home or not.
What does it mean to PROTECT my assets/valuables in Bankruptcy?
When you file for a Chapter 7 Bankruptcy a Trustee is then assigned to your case. The Trustee’s job is to see if you have any money or property which they can take and pay your creditors. BUT they cannot take any property which you can EXEMPT. By EXEMPTING property you are protecting it from the Trustee so you can keep it for yourself. Any property you can’t exempt, may be taken and sold by the Trustee, so it is important that we list everything and properly exempt everything we can. Here are the two exemption schemes in California:
IMPORTANT! In order to use these exemptions, you must have resided in California for two consecutive years immediately before filing. If you have not, it is important to speak with an attorney about what exemptions would apply to your case.
DO YOU OWN A HOME?
If you own a home you will probably want to use scheme §704.
Here are the limits on protecting a home under §704:
Protect Your home: $75,000 if single and not disabled; $100,000 if you have a family with one member that has no interest in the home; $175,000 if 65 or older or if physically or mentally disabled; $175,000 if creditors are trying to force the sale of your house and you are either (a) 55 or older, single and earn under $25,000 annually or if you are 55 or older, married and earn under $35,000 annually
If you own a home and have more equity in your home than § 704 allows you to protect, you may want to file for
YOU DON’T OWN A HOME?
If you don’t own a home, you will likely want to use § 703
Under § 703 you can protect $30,800 worth of anything of value, including cash, money in the bank or personal property.
What About my Retirement Accounts?
Most retirement account are protected either under California or Federal law up to the FULL VALUE of your account. Your attorney can review your account to be sure it qualifies and to properly protect it when you file Bankruptcy.