In California, the homestead exemption for most people is $75,000. This means that if someone had $75,000 or less of equity in their home, then they would not lose their home regardless of whether it was a chapter 7 or chapter 13 bankruptcy.
There are different exemptions, depending on what personal property was being dealt with, but the idea would be to look at a list of all of the assets and then identify the exemptions that would be allowed in order to protect all of the equity in that property so as to not lose it as we move through the bankruptcy process.
Will People Who File For Bankruptcy Have To Give Up All Of Their Possessions?
The property that would have to be treated differently would depend on the type of bankruptcy that was filed. There are two major types of consumer bankruptcies. One of those is a chapter 7 and the other is a chapter 13. In the context of a chapter 13, the debtor would be able to keep all of their property, whereas in a chapter 7, which is a liquidation bankruptcy, the debtor would be able to keep their property to the extent that the property was completely exempted. Most chapter 7s are “No Asset Cases,” which means in effect the trustee in the case determined that there is no property that could be liquidated in order to pay creditors a dividend. As a result, the debtor gets to keep all of their possessions.
What Personal Items Can Someone Keep And What Would They Have To Give Up?
A careful analysis to each person’s particular situation would be required, which is why when preparing the bankruptcy and getting it ready to be filed we must spend a great amount of time in gathering all the information, correctly listing that information on the schedules in the bankruptcy paperwork, and reviewing everything carefully, so that there would be no unintended consequences by filing the bankruptcy case.
Would People Generally Be Able To Keep Basic Things In Their House Like Furniture, Clothing, Etc.?
Yes, there is no limit to the exemption of furniture, although there would be a limit regarding the exemption of jewelry, so we would need to take a look at the value of the jewelry in question and then look at the possible consequences if we were to continue through the bankruptcy process.
How Much Equity Is Someone Allowed To Keep In A Car?
In California, the motor vehicle exemption is $5,100. So the car would be protected from liquidation, allowed to keep the car, assuming there was not more than $5,100 of equity in the vehicle.
How Much Equity Can Someone Keep?
The amount of equity someone can keep will depend on a careful consideration of the following: 1) the type of property, 2) the value of that property, 3) the amount of the exemption for that property, and 4) the amount of existing claims against the property.
Would Someone Have To Sell Their Car If There Was More Equity in It than is Exempted?
Not necessarily. If someone filed a chapter 7 and there was more than the exempted equity in the vehicle, then one scenario might be that the trustee who was assigned to the case to review the bankruptcy could auction the vehicle, pay the amount that the person was exempt for, which is $5,100, and then take the remaining proceeds to pay to creditors from what was available. However, there are ways to avoid the sale of the vehicle.
For more information on How Property Is Handled In A Bankruptcy, a free initial consultation is your next best step. Get the information and legal answers you’re seeking by calling (714) 697-8600 today.