All posts in Exemptions

News you might need! The new California homestead exemption is limited a little by the bankruptcy code.

I posted a comment on Facebook a few days ago about people using the new California Homestead Exemption of $300,000 (minimum) up to $600,000 (maximum) depending on the county you live in.  The new exemption takes effect January 1, 2021.  As I said in the post, don’t try to file your bankruptcy yourself.  Get a bankruptcy attorney to make sure there are no unknown “exceptions” as there tends to be to everything.  Generally speaking you can’t change your mind after you have filed chapter 7.

Anyway, my friend Richard Marshack commented on my Facebook post:

Do not forget about 522(o) and 522(p).  11 U.S.C. 522(o), provides that a debtor may not claim as exempt his or her homestead, or any portion of the homestead, that was acquired with non-exempt assets and actual fraudulent intent to defraud a creditor.  The argument usually comes down to a simple question: What was the intent of the debtor at the time of the purchase or pay down of the homestead.  Did they have an intention to defraud their creditors? 522(p) provides that the debtor may not exempt any amount of interest that was acquired by the debtor during the 1215 period preceding the filing of the petition that exceeds $170,350.  If it is a transfer within the same state then this cap does not apply. If there is a transfer from another state to another state then the cap applies. Read more…

Important new exemption for debtor’s “deposit account.”

These new exemptions became effective January 1, 2020.

CCP 704.220. (a) Money in the judgment debtor’s deposit account in an amount equal to or less than the minimum basic standard of adequate care for a family of four for Region 1, established by Section 11452 of the Welfare and Institutions Code and as annually adjusted by the State Department of Social Services pursuant to Section 11453 of the Welfare and Institutions Code, is exempt without making a claim.

Well that’s a hand full.  Translation, money in the debtor’s bank account is automatically exempt up to a “basic standard amount.”  I should say automatically as long as the debtor does not use the 703 exemptions.  It appears that right now that the basic amount is $1,724.  It also appears that that amount is fixed whether the debtor is single or has a family of four.  I am looking into that now.

But the big one is, is 704.225 which says:

§ 704.225.  Money in a judgment debtor’s deposit account that is not otherwise exempt under this chapter is exempt to the extent necessary for the support of the judgment debtor and the spouse and dependents of the judgment debtor.

I haven’t found anything helpful in figuring out what is “necessary for the support,” in the new legislation at least  If the debtor has $25,000 in a savings account, it is exempt if that amount is necessary for the debtor’s support.  I guess if the debtor has a job and can support himself from his current income, no amount would be necessary. Read more…