There are types of bankruptcy in California highlighted under California law:
Chapter 7: For people with unsecured debts such as medical bills and credit cards. The bankruptcy trustee in this case sells the nonexempt property and distributes the gains to the creditors.
Chapter 13: For people with delinquent secured debts such as mortgage payments. In this case, the bankruptcy trustee keeps everything but the value of the nonexempt property equity must be paid in the disposable income or the repayment plan.
California Bankruptcy exception systems
The state laws exemptions are found in the Code of civil procedure section 704 and Code of Civil procedure section 703.140.
System 1: 704 Exemptions
Homestead Exemption: It protects some amount of equity in a principal residence. Personal property can be exempted while filing for bankruptcy including a mobile home. Stock cooperative, community apartment, planned development, condominium, or boat up to $600,000 according to section 704.010.
Motor Vehicle Exemption: protects equity in truck, car, motorcycle, or any other vehicle for up to $3,325 according to section 704.010.
- Personal Property: the following fall under personal property:
- Personal effects and household items according to section 020
- Materials to repair or improve residential building up to $3,500 according to section 030
- Jewelry and works of art up to $ 8,725 as per section 040
- Health aids- section 050
- $1,788 bank deposits or amount needed for support as per section 225
- Bank deposits (social security payments), $3,500 for a single payee, $5,250 for husband and wife, and unlimited for non-commingled funds. Public benefits fund for up to $1,750 according to section 080.
- Wrongful death causes and personal injuries recoveries as per sections 140 and 704.150.
- Cemetery and burial plot according to section 200.
Wages: 75% of the wages paid within 30 days before filing for bankruptcy according to section 704.070.
Retirement and Pensions: This section contains:
- Tax-exempt retirement accounts as per (11 U.S.C. § 522)
- IRAS and Roth IRAs where limitation applies as per 11 U.S.C. § 522(b)(3)(C)(n
- Public retirement benefits as per section 110.
- Private retirement plans and benefits, including IRA and Keogh as per section115.
- Section Gov’t Code § 21255, Cal. Gov’t Code § 31452, Cal. Gov’t Code § 31913, Cal. Gov’t Code § 32210 talks about public employees, county employees, county peace officers, and county firefighters respectively.
Public Benefits: the following sections are in regards to public benefits:
- 160– union benefits-labor disputes, unemployment and disability benefits
- 170– public assistant benefits
- 180-relocation benefits
- 190– student financial aid
- 240-FEMA benefits
Matured insurance- unlimited value and unmatured insurance of up to $13,975 according to section 704.100.
Homeowners’ insurance proceeds – section 704.720
Health/disability insurance benefits- section 704.130
Life insurance according to Cal. Insurance Code § 10132, 10170, 10171
Fidelity bonds-Cal. Labor Code § 404
System 2: 703 exemptions
Homestead Exemption: according to 703.140(b)(1), up to $29,275 for r personal property in the residence.
Motor Vehicle Exemption: $5,850 of equity in motor vehicles
Personal Property: The following are under this section:
- Burial plot instead of homestead exemption of up to $29,275- section 703.140(b)(1)
- Jewelry up to $1,750 – section 140(b)(4)
- Personal injury recoveries up to $29,275 – section 140(b)(11).
- Health aids – section 140(b)(9)
- Wrongful death recoveries –section 140(b)(11).
Retirement and Pensions
Tax-exempt retirement accounts according to 11 U.S.C. § 522.
IRAS and Roth IRAs with limitations according to 11 U.S.C. § 522(b)(3)(C)(n).
ERISA-qualified pension, annuities, and benefits as per section 703.140(b)(10).
Public Benefits: Social security, unemployment compensation, public assistance, and veterans benefits according to section 703.140 (b)(10).
Alimony and Child Support: according to section 703.140(b)(10).
Insurance: The following is under insurance:
Disability benefits – section 703.140(b)(10).
Loss of future earnings payments – section 703.140(b)(11)(E).
Umatured life savings (other than credit) – section 703.140(b)(7).
Unmatured life insurance accrued interest, dividends, loan, cash, or surrender value up to $15,650 – section 703.140(b)(8).
Wildcard: According to section 703.140(b)(5), $1,550 and any unused amount of homestead or burial exemption in any given property.