California bankruptcy exemptions
These are the bankruptcy exemption in California.Make sure you check the federal bankruptcy exemption since you can choose one or another.
Asset: Homestead
- Real or personal property you occupy including mobile home, boat, stock cooperative, community apartment, planned development or condo to $50,000 if single and not disabled; $75,000 for families if no other member has a homestead (if only one spouse files, may exempt one-half of amount if home held as community property and all of amount if home held as tenants in common), $125,000 if 65 or older, or physically or mentally disabled; $100,000 if 55 or older, single and earn under $15,000 or married and earn under $20,000 and creditors seek to force the sale of your home; sale proceeds exempt for 6 months after received (husband and wife may not double).The law section
are 704.710,704.720,704.730
Asset: personal property
- Appliances, furnishings, clothing and food needed. The law section is 704.020
- Bank deposits from Social Security Administration to $2000 ($3000 for husband and wife) . The law section is 704.080
- Building materials to $2000 to repair or improve home (husband and wife may not double) . The law section is 704.030
- Burial plot. The law section is 704.200
- Health aids. The law section is 704.050
- Jewelry, heirlooms and art to $5000 total (husband and wife may not double) . The law section is 704.040
- Motor vehicles to $1900, or $1900 in auto insurance if vehicle(s), lost, damaged or destroyed (husband and wife may not double) . The law section is 704.010
- Personal injury and wrongful death causes of action. The law section is 704.140 (a),704.150 (a)
- Personal injury and wrongful death recoveries needed for support; if receiving installments, at least 75%. The law section is 704.140(b), (c), (d),704.150 (b), (c)
- May file homestead declaration. The law section is 704.920
Asset: Insurance
- Disability or health benefit. The law section is 704.130
- Fidelity bonds. The law section is Labor 404
- Fraternal unemployment benefits. The law section is 704.120
- Homeowner’s insurance proceeds for 6 months after received, to homestead exemption amount. The law section is 704.720 (b)
- Life Insurance proceeds if clause prohibits proceeds from being used to pay beneficiary’s creditors. The law section is Ins. 10132, Ins. 10170,Ins. 10171
- Matured life insurance benefits needed for support. The law section is 704.100 (c).
- Unmatured life insurance policy loan value to $8,000 (husband and wife may double. The law section is 704.100 (b).
Asset: MISC
- Business or professional licenses. The law section is 695.060
Inmates’ trust fund to $1000 (husband and wife may not double). The law section is 704.090
- Property of business partnership. The law section is Corp. 15025
Asset: Pensions
- County employees.The law section is Gov’t 31452
- County firefighters. The law section is Gov’t 32210
- County peace officer. The law section is Gov’t 31913
- Private retirement benefits, including IRAs and Keoghs. The law section is 704.115
- Public employees. The law section is Gov’t 21201
- Public retirement benefits. The law section is 704.110
Assets: public benefits.
- Aid to blind, aged, disabled, AFDCThe law section is 704.170
- Financial aid to students. The law section is 704.190
- Relocation benefits. The law section is 704.180
- Unemployment benefits. The law section is 704.120
-Union benefits due to labor dispute. The law section is 704.120(b)(5)
-Workers’ compensation. The law section is 704.160
Assets: tools of trade
- Tools, implements, materials, instruments, uniforms, books, furnishings, equipment, vessel, motor vehicle to $5,000 total; to $10,000 total if used by both spouses in same occupation (cannot claim motor vehicle under tools of trade exemption if claimed under motor vehicle exemption). The law section is 704.060.
Assets: wages
Minimum 75% of wages. The law section is 704.070.
Public employees vacation credits; if receiving installments, at least 75%. The law section is 704.113.
Chapter 7 and 13 Bankruptcy Discharge Cases
The debtor is being released from personal liability for certain specified types of debts, by a bankruptcy discharged. Also, there has to be kept in mind that a bankruptcy discharge can help the debtor to avid paying any debts that are being discharged. Any form of collection action on discharged debts, including legal action and communications with the debtor, such as telephone calls, letters, and personal contacts, are being prohibited if the debtor goes for a bankruptcy discharge.
Even more, a valid lien that has not been avoided in the bankruptcy case will remain after the bankruptcy case¸ although a debtor is not personally liable for discharged debts. In order to recover the property secured by the lien, the lien may be enforced by a secured creditor.
An important aspect which has to be taken into consideration is being represented by the fact that, depending on the chapter under which the case is filed, the timing of the bankruptcy discharge varies. Also, there has to be kept in mind that, on expiration of the time fixed for filing a complaint objecting to discharge and the time fixed for filing a motion to dismiss the case for substantial abuse, the court usually grants the bankruptcy discharge promptly, in a Chapter 7 case. When it comes to Chapter 13 bankruptcy, the court generally grants the discharge as soon as practicable after the debtor completes all payments under the plan.
The bankruptcy discharge typically occurs about four years after the date of filing, since a Chapter 13 plan may provide for payments to be made over three to five years. It is important as well to be considered that, if the debtor fails to complete “an instructional course concerning financial management”, the court may deny an individual debtor’s bankruptcy discharge in Chapter 7 or 13 cases.
Your income and chapter 7 bankruptcy
As you probably know by know your monthly income has a significant impact in the bankruptcy process. The income you have now can make the difference between chapter 13 and chapter 7 bankruptcy.
Many of you have the impressions that you need to be penniless to apply for Chapter 7.This is false. You can make a consistent amount of money every month and have debts that cannot be paid. This is where the Means test appears.
The chapter 7 means test was designed to limit the use of Chapter 7 bankruptcy to those who truly can’t pay their debts. The principle is simple: You calculate the disposable income by deducting the monthly expensed from your monthly income. Then you compare the disposable income with the median income per family on your state (of course for the same number of members).If you disposable income is lower than the state median you qualify for a chapter 7 bankruptcy.
If not you will be redirect to Chapter 13 bankruptcy which require paying your debts under payback plan.
In conclusion: Yes your income can be important factor when you want to fill for Chapter 7 but is not the decisive factor. A person who make 4000$ in New York may qualify for Chapter 7 while another person that makes 3000$ in Alabama may not. In the end the disposable income is the thing that matter mostly.
Chapter 7 vs Chapter 13 bankruptcy
Main difference
Chapter 7 is liquidation bankruptcy. All your debts that are not on exempt list will be sold by the bankruptcy trustee in order to pay your creditors.
Chapter 13 is a reorganization plan. During a 3 to 5 years period you pay the creditors according to a payment plan.
Payments
Chapter 7: in this case there is no payment involved (Others than the bankruptcy fees).
Chapter 13: you have to pay a certain % from your income according to payment plan developed by you and approved by the trustee and court. If you fail to make a single payment your case may be dismissed.
Debts
Chapter 7: all your unsecured debts are wipeout. You still have to pay in full debts like tax debts, child support or alimony.
Chapter 13: When you make the payment plan you have to make sure that the administrative claims and priority debts will be paid 100%.Also the secure debts must be fully paid if you want to keep your property. Unsecured debts will be paid anywhere from 0% to 100% of what you owe with the money left after you paid rest of the debts.
Discharge
Chapter 7: all your unsecured debts will be wipeout
Chapter 13: a part of your secure debts may be discharge. You will know exactly what will be discharged after you made the payment plan.
Timeline
Chapter 7: It takes between 4 and 6 months
Chapter 13: It takes between 3 to 5 years, depending of the monthly amount you can pay
Properties
Chapter 7: You will loose all of the non exempt properties. The trustee will sell these properties in order to partially pay your creditors. Consult the federal and state exempt list to see what you can keep.
Chapter 13: As long as you stick with the payment plan you will keep your properties. Make sure that the mortgages and car loans are paid 100% in your plan if you want this to happen.
Buying a car during Chapter 13 bankruptcy
The basic rule of Chapter 13 bankruptcy is that you agree to pay what you can for three to five years in return for having a large portion of your debt wiped away. For any extra credit you need to get the trustee approval. Any expense can make your payment plan obsolete so is natural to have the trustee approval before getting new debts.
Also you need to announce the trustee of your getting less or more money. He can adjust the monthly payments according to your income. The trustee may approve the additional credit for a decent car (200 to 250 per month rate) but when you talk to the trustee, you will have to present a new accounting of your income and expenses. The bankruptcy trustee will challenge anything excessive so prepare your facts carefully.
If you earning some extra income and presents the situation correctly to the trustee you will be allowed to finance a new car. But the hardest part may be the actual finding a car that you can finance. Even if this is time consuming process you will find a dealer that is willing to give you a car (maybe with a bigger interest).
Again , this car will satisfy your basic transportation needs; don’t even think to something more than basic because the trustee will reject this option from the start.
As you can see, even if you are in a difficult situation like chapter 13 bankruptcy you can manage to get a car. As a final advice: stay away from second hand cars. These machines can consume a lot of money with repairs and maintenance.
