Please note that the California exemption statutes below are as of April 2019. They do change periodically so please consult with a bankruptcy professional (such as me), or go online to the bankruptcy court website prior to relying on any numbers in case they’ve changed. Filing a bankruptcy can be a complex process. The following post is for informational purposes only and does not create an attorney-client relationship.
Exemptions allow a person to keep assets after the bankruptcy. A debtor must select the set of exemptions best suited for their needs. You cannot use both. If filing as husband and wife, both must select the same set of exemptions. The set of exemption amounts selected will generally depend upon the nature and extent of a person’s assets.
The Bankruptcy Code provides that, to be eligible to claim a particular state’s exemptions, they must reside in that state for 2 years preceding the bankruptcy filing. If they did not reside in any one state for that period, then the laws of the state in which they resided during the 180-day period before the 2-year period applies (or during a longer portion of the 180-day period than in any other place).
SET NO. 1 —CCP Section 703
- REAL PROPERTY (C.C.P. § 703.140(b)(1))
A $29,275 exemption in real property (including a mobile home) is allowed if used as a primary residence or burial plot.
- WILD CARD (C.C.P. § 703.140(b)(5))
The “wild card” can exempt $1,550, plus any unused portion of the $29,275 exemption listed in paragraph number 1 above, in any asset. In other words, if a person does not claim an exemption in a residence, they have a $30,825 exemption that they can claim in any assets.
- MOTOR VEHICLE (C.C.P. § 703.140(b)(2))
The maximum allowed is $5,850 in one or more motor vehicles.
- HOUSEHOLD FURNISHINGS AND PERSONAL EFFECTS (C.C.P. § 703.140(b)(3))
An unlimited exemption is allowed in household furnishings, household goods, wearing apparel, appliances, books, animals, crops, or musical instruments, which are held primarily for personal, family, or household use, so long as no single item is worth more than $725.
- JEWELRY (C.C.P. § 703.140(b)(4))
The maximum exemption is $1,750 in jewelry held primarily for personal, family, or household use.
- TOOLS OF THE TRADE (C.C.P. § 703.140(b)(6))
A $8,725 exemption is allowed for professional books or tools of your trade.
- LIFE INSURANCE (C.C.P. § 703.140(b)(7) and (8))
An exemption is allowed in any unmatured life insurance policy with no cash value. If the policy has cash value, $15,650 is exempt.
- HEALTH AIDS (C.C.P. § 703.140(b)(9))
An unlimited amount is allowed for health aids.
- BENEFITS PAYMENTS (C.C.P. § 703.140(b)(10))
A total exemption is allowed for social security benefits, unemployment compensation, veteran’s, disability, or unemployment benefits. Alimony or support payments are also exempt, but only to the extent that they are reasonably necessary for a persons support and support of any dependents.
- PENSION PLANS (C.C.P. § 703.140(b)(10)(E))
An exemption is allowed for any payment under a stock, bonus, pension, profit-sharing, annuity, or similar plan on account of illness, death, disability, age, or length of service, to the extent reasonably necessary for the support of the debtor, his or her spouse and any dependents. This exemption applies to IRA accounts which are exempt to the extent required for the debtor’s support at retirement. Courts have ruled that what is reasonably necessary for the support of the debtor should be sufficient to sustain basic needs, and not related to the debtor’s former status in society or lifestyle to which he or she is accustomed.
NOTE: The U.S. Supreme Court has held that any retirement plan which is ERISA qualified or contains a “spendthrift” provision can be kept by a person filing bankruptcy regardless of the amount in the plan.
ALSO NOTE: The new bankruptcy law, effective October, 2005, protects retirement funds in an account exempt from taxation under IRC §§401, 403, 408, 408A, 414, 457, or 501(a) are exempt irrespective of their treatment under the above state exemption. This new exemption includes IRA accounts up to a maximum of $1,095,000 million, although this amount may be increased “if the interests of justice so require.”
- MISCELLANEOUS PAYMENTS (C.C.P. § 703.140(b)(11))
Exemptions are allowed for (1) any payments under a crime victims’ reparation law, and (2) any payments on account of the wrongful death of a person of whom the debtor was a dependent or on account of a life insurance contract, but only to the extent reasonably necessary for the support of the debtor and his or her dependents.
- PERSONAL INJURY CLAIMS (C.C.P. § 703.140(b)(11)(D))
Any payment on account of a personal injury lawsuit is exempt up to $29,275. Compensation for loss of future earnings is exempt to the extent reasonably necessary for your support or the support of your dependents.
SET NO. 2 –CCP Section 704
- A HOMESTEAD IN A PRIMARY RESIDENCE (C.C.P. § 704.730)
The amount of this exemption is:
-$75,000 for a single person,
-$100,000 for a married person OR a head of household,
-$175,000 for a person 65 years or older OR a disabled person, OR a person 55 years or older with an income of less than $15,000 (or $20,000 if a married couple).
To qualify for the homestead exemption, the property must be the principal residence of the debtor or the debtor’s spouse. The Bankruptcy Code now also requires that a person is only entitled to a maximum homestead of $125,000 until such time as they have lived in that state for approximately 3.4 years. (This will obviously only relate to those claiming the larger $150,000 homestead amount.)
The exemption is for equity in the property. For exemption purposes, equity is determined by taking the fair market value of the property and subtracting the value of any consensual liens (mortgages and deeds of trust).
- MOTOR VEHICLE (C.C.P. § 704.010)
The maximum allowed is $3,325 total equity in motor vehicles.
- HOUSEHOLD FURNISHINGS AND PERSONAL EFFECTS (C.C.P. § 704.020)
All household furnishings, personal effects, and appliances are free from creditors’ claims so long as they are reasonable and necessary. A household item which has unusually high value (such as an extremely rare antique), may not be exempt.
- JEWELRY (C.C.P. § 704.040)
The maximum exemption is $8,725 in jewelry, heirlooms, and works of art.
- HEALTH AIDS (C.C.P. § 704.050)
Reasonably necessary health aides are exempt.
- TOOLS OF THE TRADE (C.C.P. § 704.060)
A person can exempt up to $8,725 in tools, books, equipment, and one commercial motor vehicle if reasonably necessary and actually used in the exercise of your trade, business, or profession. If both spouses are in a trade, business, or profession, this section specifically allows each a $8,725 exemption. This may be used to exempt a vehicle so long as it is used for business purposes, up to $9,700.
- BUILDING MATERIALS (C.C.P. § 704.030)
Materials that are to be used to repair or improve a persons residence are exempt up to $3,500.
- LIFE INSURANCE (C.C.P. § 704.100)
A policy with no cash value is totally exempt. The maximum exemption for the cash value of a policy is $13,975, married. Benefits from matured life insurance or annuity policies are exempt to the extent reasonably necessary for the support of the debtor and his or her spouse or dependents.
- DISABILITY, UNEMPLOYMENT, AND HEALTH INS. BENEFITS (C.C.P. § 704.120, 704.130)
Payments from these types of insurance are exempt with no dollar limit.
- PERSONAL INJURY CLAIMS (C.C.P. § 704.140)
A lawsuit, or the right to sue someone, is an asset in the eyes of the law. When a personal injury cause of action (the right to sue) has not yet been reduced to a judgment and paid, the entire claim is exempt. When money has been paid as a result of a personal injury accident, the money is exempt, but only to the extent that it is reasonably necessary for the support of you and your dependents. If the award or settlement is payable in installments, each payment is exempt except to the extent that the same amount of earnings would be subject to wage garnishment.
- WRONGFUL DEATH CLAIMS (C.C.P. § 704.150)
A wrongful death claim is exempt to the same extent as a personal injury claim.
- WORKERS’ COMPENSATION CLAIMS AND AWARDS (C.C.P. § 704.160)
A workers’ compensation claim and award is completely exempt without limitation.
- PUBLIC RETIREMENT BENEFITS (C.C.P. § 704.110)
All amounts held for retirement by a “public entity” are exempt without limitation. “Public entities” are governmental bodies as well as public corporations.
- PRIVATE RETIREMENT BENEFITS (C.C.P. § 704.115(a)(1) & (2), (b)
Benefits payable or paid under private retirement accounts, union retirement plans, and profit-sharing plans designed and used for retirement purposes are exempt in an unlimited amount. This section is intended to exempt only retirement plans established or maintained by private employers or employee organizations, such as unions, not arrangements by individuals to use specified assets for retirement purposes. Funds in self-employment retirement plans and individual retirement annuities and accounts (including IRAs) may be exempt if designed and used principally for retirement purposes.
Amounts in self-employment retirement plans and IRAs are subject to the further limitation that they are exempt only to the extent necessary for the support of the debtor (and his or her spouse and dependents) at the time of retirement, taking into account all of the resources likely to be available to the debtor when he or she retires.
NOTE: The U.S. Supreme Court has held that any retirement plan which is ERISA qualified or contains a “spendthrift” provision can be kept by a person filing bankruptcy, regardless of the amount in the plan.
ALSO NOTE: The new bankruptcy law enacted in October, 2005 now protects retirement funds in an account exempt from taxation under IRC §§401, 403, 408, 408A, 414, 457, or 501(a) are exempt irrespective of their treatment under the above state exemption. This new exemption includes IRA accounts up to a maximum of $1,095,000, although this amount may be increased “if the interests of justice so require.”
- PRE-PETITION WAGES (C.C.P. § 704.070)
Wages earned 30 days prior to the bankruptcy are partially exempt. This exemption protects 75 percent of the amount you received during this period. If these wages were subject to garnishment, all of these funds are exempt. (Of course, all wages you receive after the bankruptcy is filed are free of creditors’ claims).
16 PRISONER’S FUND (C.C.P. § 704.090)
The maximum exemption is $1,750
- CHARITABLE AID, STUDENT LOANS, AND RELOCATION BENEFITS (C.C.P. § 704.080, C.C.P. § 704.190, and C.C.P. § 704.180
Any funds received for these purposes are exempt.
- CEMETERY PLOT (C.C.P. § 704.200)
Any cemetery plot owned is exempt.
- DEPOSIT ACCOUNTS (C.C.P. § 704.080)
If a bank account can be shown to receive Social Security payments by direct deposit, it is protected up to $3,500 for an individual and up to $5,250 for a couple.
If a bank account can be shown to receive public benefits, it is protected up to $1,750 for an individual and $2,600 for a couple.