Many times when people consider filing for bankruptcy, they worry about losing all of their personal property to the bankruptcy process. Fortunately, that is not the case. The government recognizes the fact that people need a home to live in, a vehicle to get to and from work, and they have a right to keep their wedding rings and their heirloom jewelry. Under the laws that have come to be known as “asset protection,” bankruptcy filers are allowed to keep certain property, regardless of the fact that they owe money to others.
Property exemptions vary from state to state; however, their function remains uniform, they designate what property is to remain “off limits” to your creditors. California is the only state to have two different sets of state exemptions for the debtor to choose from. The debtor must choose from one system or the other, they cannot pick a few exemptions from one system and choose a few from the other. It will be important for the debtors to choose wisely, because one system will be more applicable to their situation than the other. It will be necessary to discuss which system will better suit your needs with your bankruptcy attorney; they will have the ability to point you in the right direction.
Under California’s System 1, the exemptions are similar to those found in other states. Under this system there is a large homestead exemption which is advantageous to homeowners. System 2 is much like the federal bankruptcy exemptions. It includes the “wild card” exemption which allows filers who do not own a home to use the value of the homestead exemption for any property that they choose.
Under the state of California’s System 1, the homestead (home) is exempt, as well as personal items such as your motor vehicle, your furniture and your clothing. People are also allowed to keep their jewelry and any moneys received from social security, personal injury or wrongful death causes of action. There are also a number of other exemptions which cover wages, pensions and public benefits among others. California’s System 2 allows for the homestead (real or personal property up to $22,075) exemption, it allows you to keep your motor vehicle, it allows you to keep certain personal property, pensions, tools of the trade, alimony and child support and more. The System 2 also has the “wild card,” which allows you to keep ($1,175 of any property).
These two systems are very favorable to the debtor, after an in depth review of the full list of exemptions on System 1 and System 2; you will have a clearer picture of which system best suits your economic needs. For more detailed information about the bankruptcy exemptions, contact a seasoned bankruptcy lawyer. Your attorney will be able to explain all of your bankruptcy options so you can make an informed decision about how best to proceed. There are numerous benefits to filing bankruptcy that may be able to help your unique situation.