Fairfield Bankruptcy Attorney speaks on Exemptions

The current exemption amounts can be found on the California Judicial Council website at: www.courtinfo.ca.gov/forms/exemptions.htm. California has two exemption systems one of which you have to chose. System one and system two exempt different types and amounts of your property and your choice should be based on a thorough review and inventory of all of your property. A rule of thumb is that if you have substantial equity in your home you will chose exemption system 1. If on the other hand you are a renter or do not have extensive equity in your home you may protect more of your property by choosing exemption system 2. The exemption of property is one of the most difficult and complicated areas in bankruptcy law and should be handled by a California bankruptcy lawyer who knows the state specific laws.

Below is a brief description of the most important facts about the two exemption systems.

Bankruptcy Lawyer in Fairfield about the two Exemption Systems

System 1

This exemption system protects the following assets so that you can keep them after bankruptcy:

1. Homestead Exemption. If you file for chapter 7 bankruptcy a certain amount of equity in your home is exempt. The California Homestead Exemption will increase on January 1, 2010 to the following:
   
   1. $50,000.00 -75,000.00 of equity for a single person
   2. $75,000.00 - 100,000.00of equity for a married couple filing jointly for bankruptcy
   3. $150,000.00 - 175,000.00 if you are 65 years or older or for disabled people
   4. $150,000.00 - 175, 000.00if you are 55 or older and you earn less than $15,000.00 per year or if you are married you earn less than $20,000.00 per year.
2. Insurances. Certain insurances you may have are exempt and can be kept after the bankruptcy
   1. Life Insurance proceeds under certain circumstances
   2. Disability benefits
   3. Health benefits
   4. Cash surrender value of unmatured life insurance policy
3. Retirement and pensions
   1. Public retirement benefits
   2. Private retirement benefits
   3. IRAs, (with exeptions)
   4. Traditional IRAs and Roth IRAs up to $1,095,000.00
   5. Tax exempt retirement accounts such as 401(k), 403(b), SEP, profit-sharing, SIMPLE IRAs and defined benefit plans
4. Trade Tools
   1. Materials, tools, instruments, books, equipment, furniture used for a business or trade up to $6,750 or $13,475 if spouses file jointly for bankruptcy
   2. Commercial vehicle $4,850 or $9,700 if both spouses file jointly for bankruptcy
5. Personal Property
   1. Money in bank deposits from Social Security Administration up to $2700 or $4500 if both spouses file jointly for bankruptcy
   2. Appliances, clothing, furniture
   3. Heirlooms, art, jewelry up to $6,750
6. Salaries, Wages
   1. 75% of your wages you received within thirty days before filing for bankruptcy are exempt
   2. 75% of vacation credits for public employees
7. Public Benefits
   1. Unemployment benefits
   2. Union benefits (with exceptions)
   3. Student financial aid
   4. Public assistance
   5. Aid to disabled
   6. Workers' compensation

System Two

This system is generally appropriate for people who do not own a home or who do not have significant equity in their home. The following assets are protected.

1. Homestead exemption. Also covers personal property. Amount is $20,725.00
2. Child support and alimony with certain exceptions
3. Personal property:
   1. Furniture, appliances, books, instruments, clothing, animals.
   2. Jewelry up to $1,350
   3. Car up to $3,300 of equity in the car
   4. Recoveries from personal injuries up to $20,725.00 with certain exceptions
4. Public Benefits
   1. Public assistance
   2. Social Security
   3. Unemployment Compensation
   4. Veterans' benefits
5. Trade Tools
   1. Instruments, Implements, Books up to $2,075.00
6. Retirement benefits
   1. 401(k), 403(b), SEP and simple IRAs and defined benefit plans
   2. Roth IRAs and traditional IRAs up to $1,095,000
   3. ERISA qualified benefits under certain circumstances
7. Wildcard
   1. You have $1100 .00 to apply to any property
   2. You can use up to $20,725.00 for any propert

As a Fairfield bankruptcy attorney our firm serves clients in Solano County and Contra Costa County. As opposed to the exemption amounts, IRS expense allowances are different from county to county. A bankruptcy lawyer in Fairfield or in Solano County will know the specific rules for that county.