If you are a resident of the state of California you can take advantage of the state’s generous exemption laws to protect your property and other assets but it is important to understand the limitations of these laws and how they apply to your specific situation. When filing a Chapter 7 bankruptcy it is important to note that the majority of Chapter 7 bankruptcies are no-asset cases where the trustee does not make any attempt to sell your personal property. With that said, if you own a home or have other expensive assets you want to protect you will want to understand all of the rights you have under California law and apply them when possible. California has created bankruptcy laws in order to protect people and their property allowing them to become debt free and get their finances back on track. Exemptions enable you to retain specific assets following bankruptcy. It’s essential to choose the set of exemptions that aligns with your particular requirements. You cannot blend exemptions from both sets; rather, you must exclusively utilize exemptions from one set or the other. For married filers, both spouses must utilize the same set of exemptions without the option to double their exemptions.
Most states in the United States offer homestead exemptions to safeguard one’s primary residence in the event of bankruptcy. Unlike some other states, California does not permit the utilization of Federal exemption laws in a California bankruptcy proceeding. Instead, California offers two distinct exemption schemes as specified in Section 703 and Section 704 of the California Code of Civil Procedure. When deciding whether you should be Using California’s 703 vs. 704 Exemptions you need to understand the difference between and what best applies to your situation. While it is possible to negotiate with your mortgage lender to bring your delinquent mortgage up to date in Chapter 7, it’s crucial to recognize that the lender is not obligated to cooperate, and a significant number choose not to. To safeguard your home from potential loss in Chapter 7, it is advisable to ensure that your mortgage payments are up-to-date, that you can shield all equity through a homestead exemption, and that you are capable of maintaining your mortgage payments even after the bankruptcy process.