California Bankruptcy Exemptions

Learn what property you can keep if you file for bankruptcy in California.

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When filing for Chapter 7 or Chapter 13 bankruptcy, California allows you to choose between two different sets of exemptions. Exemptions protect your property in Chapter 7 bankruptcy and help determine how much you have to pay unsecured creditors in Chapter 13 bankruptcy.

For more information on how bankruptcy exemptions work, which exemption system you should use, and specific types of exemptions such as the homestead and motor vehicle exemption, see our Bankruptcy Exemptions area.

California Requires Debtors to Use State Exemptions

Certain states offer you a choice between state exemptions and the federal bankruptcy exemption system – but California is not one of them. In California, you must use state exemptions. Luckily, California has two state exemption systems you can choose from (you must choose one system or the other).

Generally, debtors with substantial home equity prefer System 1 while System 2 is more beneficial for debtors who have a lot of money in the bank or other valuable items because of its generous wildcard exemption. Depending on your assets, be sure to compare each set and choose the one that works best in your situation. In addition to the exemptions found in System 1 or System 2, you may also use any applicable amounts in the federal nonbankruptcy exemptions.

California Does Not Allow Married Couples to Double Their Exemptions

If you are a married couple filing a joint bankruptcy, some states allow you to double the amount of your exemptions. But California is not one of these states. In California, married couples may not double their exemptions unless a particular exemption expressly allows for it.

California Bankruptcy Exemption System 1

Unless otherwise noted, all law references are to the California Code of Civil Procedure. These exemptions were last updated by the California Judicial Council to adjust for inflation on April 1, 2013. The next update will be April 1, 2016.

Homestead

The homestead exemption protects a certain amount of equity in your principal residence. In System 1, you can exempt real or personal property you reside in at the time of filing for bankruptcy, including a mobile home, boat, stock cooperative, community apartment, planned development or condominium, up to: $75,000 if single and not disabled; $100,000 if family and at least one family member has no interest in the homestead; $175,000 if 65 or older or if physically or mentally disabled; $175,000 if creditors are seeking to force the sale of your home and you are either (a) 55 or older, single and earn under $25,000 per year, or (b) 55 or older, married and earn under $35,000 per year - 704.730.

For more details on California’s homestead exemption rules and amounts, see The California Homestead Exemption.

Motor Vehicle

The motor vehicle exemption is designed to protect a certain amount of equity in your car, truck, motorcycle, or other vehicle. Under System 1, your motor vehicle exemption is $2,900 - 704.010.

For more information on California’s motor vehicle exemption, see The California Motor Vehicle Exemption.

Personal Property

  • Household items and personal effects - 704.020.
  • Residential building materials to repair or improve home up to $3,050 - 704.030.
  • Jewelry, heirlooms and works of art up to $7,625 - 704.040.
  • Health aids - 704.050.
  • Bank deposits arising out of Social Security payments up to $3,050 for a single payee ($4,575 for husband and wife payees) and unlimited if funds are not commingled; bank deposits from other public benefit payments up to $1,525 ($2,275 for husband and wife as joint payees) - 704.080.
  • Personal injury and wrongful death causes of action and recoveries that are necessary for support - 704.140 & 704.150.
  • Cemetery and burial plot - 704.200.

Wages

  • 75% of wages paid within 30 days prior to filing bankruptcy - 704.070.
  • Public employee vacation credits (at least 75% if receiving installment payments) - 704.113.

Retirement & Pensions

  • Tax exempt retirement accounts (including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans) - 11 U.S.C. § 522.
  • IRAS and Roth IRAs to $1,245,475 - 11 U.S.C. § 522(b)(3)(C)(n). (This amount is set by federal law. See The Federal Bankruptcy Exemptions for updates on this dollar amount.)
  • Public retirement benefits - 704.110.
  • Private retirement plans and benefits, including IRA and Keogh - 704.115.
  • Public employees - Cal. Gov’t Code § 21255.
  • County employees - Cal. Gov’t Code § 31452.
  • County peace officers - Cal. Gov’t Code § 31913.
  • County fire fighters - Cal. Gov’t Code § 32210.

Public Benefits

  • Unemployment and disability benefits, and union benefits due to labor disputes - 704.120.
  • Workers' compensation benefits - 704.160.
  • Public assistance benefits - 704.170.
  • Relocation benefits - 704.180.
  • Student financial aid - 704.190.

Tools of Trade

  • Tools, implements, materials, books, uniforms, instruments, one commercial vehicle, equipment, and furnishings up to $7,625 total, or up to $15,250 if used by both spouses in the same occupation. Commercial vehicle up to $4,850, or $9,700 if used by both spouses in the same occupation - 704.060.

Insurance

  • Matured life insurance benefits needed for support of unlimited value, or unmatured life insurance policy up to $12,200 - 704.100.
  • Disability or health insurance benefits - 704.130.
  • Homeowners' insurance proceeds for six months after received, up to amount of homestead exemption -704.720.
  • Fidelity bonds - Cal. Labor Code § 404.
  • Life insurance proceeds if policy prohibits use to pay creditors - Cal. Insurance Code § 10132, 10170, 10171.

Miscellaneous

  • Business or professional licenses - 695.060.
  • Trust funds of inmates up to $1,525 - 704.090.
  • Property of business partnership - Cal. Corporations Code § 16501.

California Bankruptcy Exemption System 2

California’s System 2 exemptions only apply in bankruptcy (they can’t be used to protect your property against creditors outside of bankruptcy). Certain courts have deemed bankruptcy-only exemption systems to be unconstitutional while others allow debtors to use them.

This means that some courts (especially if you are filing for bankruptcy outside of California but are still using California exemptions because of domicile rules) may not allow you to use the System 2 exemptions. As a result, consider talking to a knowledgeable bankruptcy attorney to determine which exemptions are permitted in your area.

Unless otherwise noted, all law references are to the California Code of Civil Procedure. These exemptions were last updated by the California Judicial Council to adjust for inflation on April 1, 2013. The next update will be April 1, 2016.

Homestead

Under System 2, California’s homestead exemption is $25,575 for real or personal property used as a residence - 703.140(b)(1).

For more information, see The California Homestead Exemption.

Motor Vehicle

In System 2, you can exempt up to $5,100 of equity in your motor vehicles.

To learn more about California’s motor vehicle exemption, see The California Motor Vehicle Exemption.

Personal Property

  • Burial plot up to $25,575 instead of homestead - 703.140(b)(1).
  • Clothing, household goods, appliances, furnishings, animals, books, musical instruments and crops up to $650 per item - 703.140(b)(3).
  • Jewelry up to $1,525 - 703.140(b)(4).
  • Health aids - 703.140(b)(9).
  • Wrongful death recoveries needed for support - 703.140(b)(11).
  • Personal injury recoveries up to $25,575 - 703.140(b)(11).

Retirement & Pensions

  • Tax exempt retirement accounts (including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans) - 11 U.S.C. § 522.
  • IRAS and Roth IRAs up to $1,245,475 - 11 U.S.C. § 522(b)(3)(C)(n).
  • ERISA-qualified pension, annuities, and benefits necessary for support - 703.140(b)(10).

Public Benefits

  • Unemployment compensation, Social Security, Veterans' benefits, and public assistance - 703.140(b)(10).
  • Crime victims' reparation benefits - 703.140(b)(11).

Tools of Trade

  • Tools, books and implements of trade up to $7,625 - 703.140(b)(6).

Alimony & Child Support

  • Alimony and child support necessary for support - 703.140(b)(10).

Insurance

  • Unmatured life insurance policy, other than credit - 703.140(b)(7).
  • Unmatured life insurance accrued interest, dividends, loan, cash or surrender value up to $13,675 - 703.140(b)(8).
  • Disability benefits - 703.140(b)(10).
  • Life insurance proceeds needed for support - 703.140(b)(11).

Wildcard

  • $1,350 plus any unused amount of burial or homestead exemption in any property (currently $26,925 in total if no homestead exemption is used) - 703.140(b)(5).

California Exemptions Are Adjusted Periodically

California’s exemption amounts are adjusted every three years by the California Judicial Council. The adjusted figures are no longer updated in the exemption statutes but may be found on the California Judicial Council’s website.

For more information on how to research and find the latest exemption amounts, see our Legal Research Center.

by: , Attorney

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