Question

Question : does CA allow for the exemptions in every case of bankruptcy?

There are a lot of rules involved when filing for chapter 7 bankruptcy especially in CA are there any fees for filing bankruptcy in CA? Are your assets unprotected if they exceed the amounts listed?

Discussion:

defines and differentiate between Chapter 7 and Chapter 11 bankruptcy.

Chapter 7 bankruptcy is the simplest and most common form of bankruptcy. In Chapter 7, if the debtor has assets not protected by an exemption, a court appointed trustee may sell the assets and distribute the net proceeds to creditors according to the priorities established in the Code.

This chapter of the Bankruptcy Code generally provides for reorganization, usually involving a corporation or partnership. A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. People in business or individuals can also seek relief in chapter 11.

Explain the differences between Chapter 7 bankruptcy and Chapter 11 bankruptcy.

The most common type of bankruptcy is filed which accounts for 70 percent of all filings. The trustee sells the assets and distributes all proceeds first to secured creditors and then to unsecured creditors. Depending on the outcome of the asset sale, creditors can receive anywhere between 0 and 100 percent of their claims against the bankrupt company. Once the bankruptcy proceeding is complete, any remaining debts are discharged and the company disappears.Straight bankruptcy proceedings can be started by filing either a voluntary or an involuntary petition. A voluntary case starts when the debtor files a petition with a bankruptcy court, stating the names and addresses of all creditors, the debtor's financial position, and all property the debtor owns. On the other hand, creditors start an involuntary petition by filing with the bankruptcy court. As soon as a petition is filed in a bankruptcy court, all creditors' claims against the debtor are suspended. Called an automatic stay, this provision prevents creditors from collecting any of the debts the debtor owed them before the petition was filed, In other words, no creditor can begin or continue to pursue debt collection once me petition is filed.Not every piece of property the individual bankrupt debtor owns is subject to court attachment. According to the Bankruptcy Reform Act certain assets are exempt, although each state establishes its own exemptions. The law does not allow a debtor to transfer the ownership of property to others to avoid its seizure in a bankruptcy.

In the state of California a Chapter 7 bankruptcy allows you wipe out your debts and get a “Fresh Start”. Chapter 7 bankruptcy is a liquidation where the trustee collects all of your assets and sells any assets which are not exempt. Certain debts cannot be discharged in a Chapter 7 bankruptcy, such as alimony, child support, fraudulent debts, certain taxes, student loans, and certain items charged.

When you file bankruptcy in California you may also use certain federal exemptions in addition to your California exemptions.

California has two sets of exemptions. You must choose one or the other.

SYSTEM 1
ASSET	EXEMPTION DESCRIPTION	LAW SECTION
HOMESTEAD	Real or personal property you occupy including mobile home, boat, stock cooperative, community apartment, planned development or condo to $75,000 if single and not disabled; $150,000 for families if no other member has a homestead (if only one spouse files, may exempt one-half of amount if home held as community property and all of amount if home held as tenants in common),$175,000 if 65 or older, or physically or mentally disabled; $100,000 if 55 or older, single and earn under $25,000 or married and earn under $35,000 and creditors seek to force the sale of your home; sale proceeds exempt for 6 months after received (husband and wife may not double).	704.710, 704.720, 704.730 In re McFall, 112 B.R. 336 (9th Cir. B.A.P., 1990)
PERSONAL PROPERTY	Appliances, furnishings, clothing and food needed	704.020
	Bank deposits from Social Security Administration to $2000 ($3000 for husband and wife)	704.080
	Building materials to $2000 to repair or improve home (husband and wife may not double)	704.030
	Burial plot	704.200
	Health aids	704.050
	Jewelry, heirlooms and art to $5000 total (husband and wife may not double)	704.040
	Motor vehicles to $1900, or $1900 in auto insurance if vehicle(s), lost, damaged or destroyed (husband and wife may not double)	704.010
	Personal injury and wrongful death causes of action	704.140 (a), 704.150 (a)
	Personal injury and wrongful death recoveries needed for support; if receiving installments, at least 75%	704.140(b), (c), (d), 704.150 (b), (c)
	May file homestead declaration	704.920
INSURANCE	Disability or health benefits	704.130
	Fidelity bonds	Labor 404
	Fraternal unemployment benefits	704.120
	Homeowner's insurance proceeds for 6 months after received, to homestead exemption amount	704.720 (b)
	Life Insurance proceeds if clause prohibits proceeds from being used to pay beneficiary's creditors	Ins. 10132, Ins. 10170, Ins. 10171
	Matured life insurance benefits needed for support	704.100 (c)
	Unmatured life insurance policy loan value to $8,000 (husband and wife may double	704.100 (b)
MISCELLANEOUS	Business or professional licenses	695.060
	Inmates' trust fund to $1000 (husband and wife may not double)	704.090
	Property of business partnership	Corp. 15025
PENSIONS	County employees	Gov't 31452
	County firefighters	Gov't 32210
	County peace officers	Gov't 31913
	Private retirement benefits, including IRAs and Keoghs	704.115
	Public employees	Gov't 21201
	Public retirement benefits	704.110
PUBLIC BENEFITS	Aid to blind, aged, disabled, AFDC	704.170
	Financial aid to students	704.190
	Relocation benefits	704.180
	Unemployment benefits	704.120
	Union benefits due to labor dispute	704.120(b)(5)
	Workers' compensation	704.160
TOOLS OF TRADE	Tools, implements, materials, instruments, uniforms, books, furnishings, equipment, vessel, motor vehicle to $5,000 total; to $10,000 total if used by both spouses in same occupation (cannot claim motor vehicle under tools of trade exemption if claimed under motor vehicle exemption)	704.060
WAGES	Minimum 75% of wages	704.070
	Public employees vacation credits; if receiving installments, at least 75%	704.113
SYSTEM 2 NOTE: Married couples may not double any exemptions (se In re Talmadge, 822 F.2d 1120 (9th Cir. 1987); In re Baldwin, 70 B.R. 612 (9th Cir. B.A.P. 1987)
ASSET	EXEMPTION DESCRIPTION	LAW SECTION
HOMESTEAD	Real or personal property, including co-op, used as residence to $17,425; unused portion of homestead may be applied to any property	703.140 (b)(1)
PERSONAL PROPERTY	Animals, crops, appliances, furnishings, household goods, books, musical instruments and clothing to $450 per item	703.140 (b) (3)
	Burial plot to $17,425, in lieu of homestead	703.140 (b) (1)
	Health aids	703.140 (b) (9)
	Jewelry to $1,150	703.140 (b) (4)
	Motor vehicle to $2,775	703.140 (b)( (2)
	Personal injury recoveries to $17,425 (not to include pain and suffering; pecuniary loss)	703.140 (b) (11) (D, E)
	Wrongful death recoveries needed for support	703.140 (b) (11) (B)
INSURANCE	Disability benefits	703.140 (b) (10)() (C)
	Life insurance proceeds needed for support of family	703.140 (b) (11) (C)
	Unmatured life insurance contract accrued avails to $9,300	703.140 (b) (8)
	Unmatured life insurance policy other than credit	703.140 (b) (7)
MISC.	Alimony, child support needed for support	703.140 (b) (10) (D)
PENSIONS	ERISA-qualified benefits needed for support	703.140 (b) (10) (E)
PUBLIC BENEFITS	Crime victim's compensation	703.140 (b) (11) (A)
	Public Assistance	703.140 (b) (10) (A)
	Social Security	703.1400 (b) (10) (A)
	Unemployment compensation	703.140 (b) (10) (A)
	Veterans' benefits	703.140 (b) (10) (B)
TOOLS OF TRADE	Implements, books, and tools of trade up to $1,750	703.140 (b) (6)
WAGES	NONE
WILD CARD	$925 of any property	703.140 (b) (5)
	Plus unused portion of homestead or burial exemption, of any property	703.140 (b) (5)

Answer 1

• California’s exemptions in bankruptcy cases:

When filing for chapter 7 or 13 bankruptcy, California allows you to choose between two different set of exemptions. Exemptions protect your property in any chapter that you file. In chapter 7 bankruptcy, the trustee will sell the property that you can’t exempt & use the proceeds to pay unsecured debts such as credit card balances, personal loans & utility bills. Whereas in case of chapter 13 bankruptcy, the trustee won’t sell the non exempt property instead keep it & pay the value of it to the unsecured creditors through three to five year repayment plan.

Hence chapter 7 bankruptcy will help in deciding which property you get to keep & chapter 13 bankruptcy exemptions will help in deciding how much has to be paid to unsecured creditors.

• Fees for filing bankruptcy in California:

The fees for filing bankruptcy in California can range from $1100 plus court filing fees. The filing fee for chapter 7 bankruptcies $306. The attorney’s fees to file chapter 7 bankruptcy can depend on the complexity of the case.

In case of chapter 13 bankruptcies, in areas of riverside orange county, Los Angeles the attorney fees charged are $4000 plus court filing fee of $281.

• Are the assets unprotected:

Don’t find a suitable answer for this from any of the sources.