Bankruptcy Exemptions
When filing for Chapter 7 Bankruptcy, you are allowed certain bankruptcy exemptions. They are referred to as 703 and 704 exemptions. These are also protections of your income and assets. The exemptions allow you to keep some or all your assets, California allows for many exemptions of your property, retirement accounts and other assets. By using the proper bankruptcy exemptions in your Chapter 7 bankruptcy case, the Debtor can prevent the Trustee from selling and liquidating your assets. 703 exemptions are for people who do not own real property. This allows them to use a wild card homestead exemption of $31,950. 704 exemptions have a larger homestead exemption and are used mainly for homeowners, however, because they protect a large portion of equity in your home, they do not have the same wild card exemption as in 703 exemptions.
Homestead Exemptions
Currently, the homestead exemption allows you to protect up to $678,391 in equity in your home. You can determine the equity in your home by looking up the value of your home on Zillow or Redfin. Then, you need to review your entire mortgage balance, not just your monthly mortgage payment. You can subtract the value of your home from the mortgage balance and see what amount you get. In most bankruptcy cases, your equity is protected, however, it depends on when you purchased your home. Protecting your home, easily people’s most valuable asset, is just one of the many reasons to consult with and hire a bankruptcy attorney.
Vehicle Exemptions
If your vehicle is financed (i.e, you make a monthly payment), then your vehicle is likely mostly, if not fully, protected. If you do not own a home and have a paid off vehicle, then your vehicle is also most likely protected via the vehicle exemption and additional wild card exemption you receive using 703 exemptions. However, if you own a home, then your exemption amount for your vehicle is much less, as you most likely will be using 704 exemptions. With the 704 exemption, you can only protect $7500 in value of all your vehicles with the vehicle exemption and there is no wild card exemption. It is important to use a Bankruptcy Attorney who can properly advise you on what amount is protected and what is not. Finally, if the entire amount of your vehicle is not protected, many times, your Bankruptcy Attorney and the Trustee can negotiate an amount to pay the Trustee and creditors RATHER than selling off your vehicle.
Retirement Accounts
Your retirement accounts are fully protected. Do not withdraw funds from your retirement accounts to pay off unsecured debts. Contact a Bankruptcy Attorney first. Chapter 7 Bankruptcy may be a better option for you than using your retirement account monies.
Jewelry, Electronics, Household Furnishings
These items are usually all protected. Our office just looks at garage sale value of these items and the Trustee does not usually want to seize these assets. Luxury jewelry or wedding rings sometimes require appraisals.
