A job loss, a divorce or a medical emergency are some of the most common events that can send a family budget into crisis. If you experienced any of these, you know how difficult it is to bounce back. You can take a part-time job and cut back on expenses, but there are only so many hours in a day and so many extras to cut from your budget.
After struggling with your finances long enough, you have finally decided to examine the benefits of bankruptcy protection. Undoubtedly, you have heard myths and misconceptions about people who have gone through bankruptcy. However, you may find relief in learning the truth about bankruptcy and how it can potentially help you.
Exemptions under the bankruptcy code
Like many, one of the most concerning aspects of bankruptcy for you may be losing your belongings. After all, part of Chapter 7 bankruptcy is using your assets to pay back your creditors. However, bankruptcy is not meant to leave you destitute; that is, in fact, contrary to its purpose. For this reason, bankruptcy laws allow you to take certain exemptions. Claiming these exemptions protects those assets from your creditors.
While the federal government has its own code for exemptions, if you are filing for bankruptcy in California, you must follow the state's laws, specifically the 703 exemptions. According to section 703 in the California Code of Civil Procedure, you may be able to claim the following exemptions:
- A maximum of $24,060 of interest in the property you use for your home or a burial plot for you or your dependent
- Up to $4,800 in a single automobile
- A total of $1,425 worth of personal jewelry
- Up to $7,175 in tools or supplies needed for your job
- The total value of any health aids a doctor has prescribed for you or your dependent
- Household furnishings and personal items worth $600 or less each, including clothing, books, appliances, animals and other items
California's code also allows a $1,280 wild card exemption to use for any item or property you wish. You may add to this any unused portion of an exemption for your residence or your burial plot. There are also exemptions for your interest in an unmatured life insurance policy, your retirement account, and any public assistance or veteran's benefits you may receive.
As you can see, there are many ways that California bankruptcy laws protect your belongings while offering you a fresh start. Because you want to ensure you choose your exemptions wisely and obtain the maximum protection from your creditors, seeking legal advice as you begin the bankruptcy process is a wise move.