California Bankruptcy Exemptions

Many people are worried that they will lose their property in bankruptcy.  These people understand that chapter 7 bankruptcy involves the sale of property before they can receive a  discharge, and mistakenly believe that all of their property will be sold accordingly.  In truth, California has two exemptions schemes that can be applied in bankruptcy to take property off the "for sale" table.  By exempting a particular piece of property in bankruptcy you are removing the equity you hold in property from the bankruptcy Trustee's grasp. In turn, you are allowed to retain that exempt property to the extent the exemption amount covers all of the equity in the property and the property is not encumbered by a lien.

California 704 Exemptions in Bankruptcy

As mentioned, California has two sets of exemptions known as the 704 and 703 exemptions, both of which are named after their respective code sections.  The 703 exemptions protect fewer specific forms of property than the 704 exemptions but gives the debtor the ability to use a "wild card" exemption to protect over $23,000 of any property, including nonexempt property.  The 704 exemption protects more specific forms of property and provides for a homestead exemption that can be used to protect equity in the debtor's home.

The 704 California exemptions protect many forms of property.  Building materials are exempt up to $2,875 at the time of this writing. Reasonably necessary health aids are also exempt, as are reasonably necessary household furnishings, appliances, and wearing apparel.  Up to $7,175 of jewelry, heirlooms, and works of art are exempt in bankruptcy.  Tools of the trade reasonably necessary in your profession are also exempt in the amount of $7,175.  Up to $2,725 of a motor vehicle is also exempt.

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