There’s a handy list available for people seeking California coronavirus financial resources. Banks that are helping with house, car payments while paychecks are stopped and the economy has grinded to a halt.
The California homestead exemption can help you save your home from creditors. Chapter 7 bankruptcy is liquidation; the bankruptcy trustee can take your stuff. They don’t take the shirt off your back, but at some point they draw the line regarding what you can keep. These are the bankruptcy exemptions, and each state has its own. The California exemptions include a way to protect some home equity.
There are two sets of California bankruptcy exemptions. Bankruptcy attorneys call these the 703s and 704s. The California homestead exemption is found in the 704s, at California Code of Civil Procedure 704.730.
Firstly, there’s the bankruptcy exemption that a single homeowner gets. This is in subsection (a)(1). In 2020, a single person who lives in a house gets to protect $75,000 of home equity under the California exemptions.
Secondly, there’s a higher exemption for a married person’s residence. This is in (a)(2). The California homestead exemption for a married person is $100,000.
Finally, if you can tick one of three boxes, you get the superduper $175,000 homestead exemption in California’s bankruptcy exemptions. To level-up and qualify for this, you have to either be:
This may seem simple, but what is “disabled?” What is “as a result of?” What is the income level, and which time period is measured? You’ll want to speak to a qualified bankruptcy attorney in your area. But in the right circumstances, someone filing consumer bankruptcy can protect a lot more house equity under this third option.
A final note: a good thing about, in particular, the $175,000 California homestead exemption is that it extends to the spouse of the person filing Chapter 7. So if the debtor is, say, 63 years old, but their husband is 67 but really doesn’t want to file bankruptcy, the 63 year old who does file Chapter 7 bankruptcy gets the $175,000 homestead exemption in California anyway.
Be careful in Chapter 7 bankruptcy. It’s not always the best type of bankruptcies.
You really should talk to a qualified Los Angeles bankruptcy lawyer, as you get what you pay for, and it’s not worth risking your home. If you don’t do this right, you’re literally gambling with your house.