California Bankruptcy Exemptions

California bankruptcy exemptions protect your property in bankruptcy, and becoming familiar with them before filing can help you determine whether your assets are at risk. If you have more questions, read Filing for Bankruptcy in California. You'll find answers, helpful checklists, and more.

How Do Bankruptcy Exemptions Work?

Bankruptcy helps struggling individuals get back on their feet by reducing their debt burden, rather than stripping them of all their assets. Exemptions enable bankruptcy filers to retain essential items necessary for maintaining a home and employment.

However, paying creditors is also an important consideration. Bankruptcy exemptions balance these interests by letting filers keep necessary property but not unnecessary luxury items. Creditors receive bankruptcy funds when a bankruptcy filer owns "nonexempt" property not covered by a bankruptcy exemption.

In most states, debtors can use exemption laws to protect property from a creditor's reach, both within and outside bankruptcy (in California, you'll use the 704 exemptions outside of bankruptcy). To determine whether your property is protected in bankruptcy, you'll compare your property to the available exemption laws.

Example. Big Creditor sued Ronin and received a $5,000 money judgment. When Big Creditor attempted to "levy" or remove money from Ronin's bank account, Ronin objected in court. Because the state's exemption law allowed Ronin to protect $1,500 of funds in a bank account, Big Creditor could seize only $3,500.

Example. When Maria filed for bankruptcy, she also had $5,000 in her checking account. In her bankruptcy petition, she listed her state's $500 cash exemption and gave the nonexempt $4,500 to the bankruptcy trustee.

Will California Bankruptcy Exemptions Protect My Property?

Yes, but you must use the California bankruptcy exemptions because the federal bankruptcy exemptions aren't available in this state. However, California is the only state with two separate exemption systems, so you will select the California exemption set that works best for you. You can also use any of the federal nonbankruptcy exemptions.

Some states allow you to double the exemption amount if you are a married couple filing jointly and both own the property. However, in California, spouses can't double exemptions, with a few exceptions. Check with a local bankruptcy lawyer for specifics.

What Are the CaliforniaBankruptcy Exemptions?

Caution: State exemptions aren't updated in real-time and should not be relied upon; they should only be used as a general guide. Some state exemption amounts might be higher, and your state's laws might have been updated. You must verify exemption availability through independent research or by consulting a local bankruptcy attorney.

California Bankruptcy Exemption System 1 (704 Exemptions)

Below you'll find exemptions commonly used by California bankruptcy filers.

704 Homestead Exemption

The homestead exemption protects a certain amount of equity in your principal residence. In System 1 (also known as § 704 exemptions), you can exempt some equity in 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.

The exemption amount changes annually according to a calculation published in the statute; however, California doesn't publish the specific amount. The American Bankruptcy Institute calculated the 2025 § 704 homestead amount floor as $361,076, with a high of $722,507, depending on the median county home price - 704.730.

Learn more about protecting your home in bankruptcy.

704 Motor Vehicle Exemption

The motor vehicle exemption protects equity in your car, truck, motorcycle, or other vehicle. The System 1 vehicle exemption is $8,625 - 704.010. Find out about protecting cars in bankruptcy and how the motor vehicle exemption works in a Chapter 7 case.

704 Retirement & Pension Benefits

Most tax-exempt pensions and retirement accounts are exempt because federal law lets filers keep tax-exempt retirement accounts in bankruptcy.

These retirement accounts include 401(K)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and traditional and Roth IRAs to $1,711,975 per person for cases filed between April 1, 2025, and March 31, 2028. (11 USC §§ 522(b)(3)(C); (n); current amounts are posted in the Federal Register.)

You can check with your fund to determine if it qualifies for tax-exempt status. Additionally, California provides that the following pensions and retirement accounts are exempt under California law:

• Public retirement benefits - 704.110.
• Private retirement plans and benefits, including IRA and Keogh - 704.115.

Other 704 Bankruptcy Exemptions

California 704 Personal Property Exemptions

• Household items and personal effects - 704.020.
• Residential building materials to repair or improve home up to $4,400 - 704.030.
• Jewelry, heirlooms, and works of art up to $10,950 - 704.040.
• Health aids - 704.050.
• Bank deposits generally up to $2,170 - 704.220.
• Bank deposits arising out of Social Security payments up to $4,400 for a single payee ($6,575 for two or more payees); bank deposits from other public benefit payments up to $2,175 ($3,250 for spouses as joint payees) - 704.080.
• Personal injury and wrongful death causes of action and recoveries necessary for support - 704.140 & 704.150.
• Cemetery and burial plot - 704.200.
• Tools, implements, materials, books, uniforms, instruments, one commercial vehicle, equipment, and furnishings up to $10,950 total, or up to $21,900 if used by spouses in the same occupation (only $4,850 or $9,700 respectively can be used to exempt a commercial vehicle) - 704.060.
• Trust funds of inmates up to $2,175 ($325 with a restitution or fine order) - 704.090.

California 704 Wage Benefits

• 75% of wages paid within 30 days before filing bankruptcy - 704.070.
• Vacation credits or pay, sick or family leave to $8,625 - 704.113.

California 704 Public Benefits

• Unemployment and disability benefits - 704.120.
• 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.
• FEMA benefits - 704.240.

California 704 Insurance Benefits

• Matured life insurance benefits needed for support of unlimited value, or unmatured life insurance policies up to $17,525 - 704.100.
• Disability or health insurance benefits - 704.130.
• Homeowners' insurance proceeds for six months after received, up to the amount of the homestead exemption -704.720.

California Bankruptcy Exemption System 2 (703 Exemptions)

California's System 2 (also known as § 703.140(b) exemptions) only applies in bankruptcy (you can't use them to protect your property against creditors outside of bankruptcy). Consider consulting with a knowledgeable bankruptcy attorney about the exemptions permitted in your area.

703 Homestead Exemption

Under System 2, California's homestead exemption is $36,750 for real or personal property used as a residence. 703.140(b)(1).

703 Motor Vehicle Exemption

In System 2, you can exempt up to $8,625 of equity in motor vehicles. 703.140(b)(2).

703 Wildcard Exemption

You can protect $1,950 and any unused amount of burial or homestead exemption (currently $36,750 in total if the filer doesn't use the homestead exemption) toward any property you choose. 703.140(b)(5). Find out about the wildcard exemption in bankruptcy.

703 Retirement and Pension Benefits

Most tax-exempt pensions and retirement accounts are exempt because federal law lets filers keep tax-exempt retirement accounts in bankruptcy. These retirement accounts include 401(K)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and traditional and Roth IRAs to $1,711,975 per person for cases filed between April 1, 2025, and March 31, 2028. (11 USC §§ 522(b)(3)(C); (n); current amounts are posted in the Federal Register.)

Additionally, California protects ERISA-qualified pensions, annuities, and benefits necessary for support under § 703.140(b)(10). You can check with your fund to determine if it qualifies for tax-exempt status.

More 703 Bankruptcy Exemptions

Personal Property

• Burial plot up to $36,750 instead of the homestead exemption - 703.140(b)(1).
• Clothing, household goods, appliances, furnishings, animals, books, musical instruments, and crops up to $925 per item - 703.140(b)(3).
• Jewelry up to $2,175 - 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 $36,750 - 703.140(b)(11).
• Tools, books, and implements of trade up to $10,950 - 703.140(b)(6).
• Alimony and child support 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).

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 $19,625 - 703.140(b)(8).
• Disability benefits - 703.140(b)(10).
• Loss of future earnings payments needed for support - 703.140(b)(11)(E).

How Do I Find California Bankruptcy Exemptions?

Unless otherwise noted, all law references are to the California Code of Civil Procedure. The California Judicial Council last adjusted most exemption amounts for inflation on April 1, 2025, with the next update scheduled for April 1, 2028 (some bank account exemptions are updated on July 1, and the 704 homestead amount is updated annually).

You'll find California's statutes online on the California Legislative Information website, and the current amounts are published on the California Courts website. The best way to verify exemptions is by consulting a local bankruptcy lawyer.

What Are the Differences Between Chapters 7 and 13 Bankruptcy?

Chapter 7 works for people who can't afford to repay creditors. Chapter 13 filers typically earn too much to qualify for Chapter 7 and must pay into a five-year repayment plan. Before filing for bankruptcy, you'll take a "means test" to determine whether you qualify for Chapter 7 or 13.

Most Chapter 7 cases close after four months, although the Chapter 7 bankruptcy trustee sometimes needs additional time to sell property or resolve a dispute. Chapter 13 cases take three to five years to complete.

Occasionally, people qualifying for Chapter 7 file for Chapter 13 to prevent a home foreclosure, car repossession, or wage garnishment. The Chapter 13 plan allows the filer to catch up on back payments over time, a benefit not available in Chapter 7.

The same exemptions are used in Chapters 7 and 13. However, what happens to "nonexempt" property you can't protect depends on the chapter filed.

What Happens to Nonexempt Property in Bankruptcy?

One of two things. You'll either lose nonexempt property or pay to keep it, depending on whether you file for Chapter 7 or Chapter 13. Here's how it works.

In Chapter 7, the bankruptcy trustee sells nonexempt property and distributes the proceeds to creditors. In Chapter 13, filers pay the value of the nonexempt property to unsecured creditors. Learn about secured and unsecured debt in bankruptcy.

The procedural differences are necessary because filers can keep all property in Chapter 13 but not in Chapter 7. Without different systems, creditors would receive less in Chapter 13 than in a Chapter 7 case.

Example. Suppose you couldn't exempt a motorcycle in Chapter 7, and the Chapter 7 trustee sold it and paid unsecured creditors $10,000 after deducting sales costs. If you filed for Chapter 13, you'd pay unsecured creditors at least $10,000 through the Chapter 13 repayment plan to keep the motorcycle.

What Will Happen If I Make an Exemption Mistake?

The bankruptcy trustee, the court-appointed official tasked with managing your case, will review Schedule C to ensure you have the right to protect the claimed property. If a problem arises, most trustees will likely try to work out the matter informally by discussing it at the 341 meeting of creditors or by phone or email. If you can't resolve the problem, the trustee will file a motion with the bankruptcy court. The judge will decide whether you can keep the property.

It's worth noting that it's not a good idea to finesse exemptions. Not only are you obligated to supply correct information on your bankruptcy forms, but purposefully making inaccurate statements could be fraudulent. Bankruptcy fraud is punishable by up to $250,000, 20 years in prison, or both.

Example. Jeff owns a rare, classic car worth $15,000, but the state vehicle exemption will only partially protect it. Believing that the car qualifies as art, Jeff exempts it using his state's unlimited artwork exemption. The trustee reviews Schedule C, disagrees with Jeff's characterization, and files an objection with the court. After consideration, the judge will likely side with the trustee, determining that the vehicle doesn't qualify as a piece of art.

How Can I Avoid Bankruptcy Exemption Problems?

Exemption issues can be more complicated than they seem, so it's important to understand bankruptcy law. For instance, you can file for bankruptcy in California after living there for over 180 days. However, you must live in California for at least 730 days before using California exemptions. Otherwise, you'd use the previous state's exemptions.

Suppose you hadn't lived in one state for two years before filing. In that case, you'd use the exemptions of the state you lived in the longest during the 180 days before the two years immediately preceding your filing. (11 U.S.C. § 522(b)(3)(A).)

More rules exist, including requirements for multiple bankruptcy filings. Find out more about filing for bankruptcy after moving to a new state and who can and can't file for bankruptcy.

Should I Hire a Lawyer to Help With Bankruptcy Exemptions?

Chapter 13 bankruptcy filers will almost always want to hire a bankruptcy lawyer. Chapter 13 is too complicated for most people to navigate successfully.

Chapter 7 filers also benefit from hiring a bankruptcy lawyer. Still, it's more feasible to represent yourself if you have a relatively simple Chapter 7 case. However, you should know that Chapter 7 filers can't dismiss a Chapter 7 matter without court approval, so it's prudent to consult a bankruptcy lawyer about potential issues. The extra step could help prevent unexpected property loss.

How Much Does It Cost to File for Bankruptcy in California?

You can expect to pay $1,500 to $2,500 for the average Chapter 7 case and more for a Chapter 13 matter. Bankruptcy lawyers with more experience will charge higher fees than those practicing in large cities because of the costs associated with doing business.

Even so, most bankruptcy matters won't require a top-tier lawyer. But because of the specialized nature of bankruptcy rules, you will want someone who has filed many cases.

At the time of writing, filing fees for Chapter 7 are $338, and for Chapter 13, they are $313. Mandatory credit counseling and debt management courses cost $50 to $75.

Can I Make Payments to My Bankruptcy Lawyer?

No, not in a Chapter 7 case. Chapter 7 lawyers won't file your matter before you've paid in full because the bankruptcy court would erase any outstanding balance with other dischargeable debts. You can pay Chapter 13 attorneys' fees in installments through the Chapter 13 plan.

Need More Bankruptcy Help?

Did you know Nolo has made the law accessible for over fifty years? It's true, and we wholeheartedly encourage research and learning. You can find many more helpful bankruptcy articles on Nolo's bankruptcy homepage. Information needed to complete the official downloadable bankruptcy forms is on the Department of Justice U.S. Trustee Program website.

However, online articles and resources can't address all bankruptcy issues and aren't written with the facts of your particular case in mind. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.