Can I Choose Between Federal and State Bankruptcy Exemptions in California?
Your state of residence determines the exemption options available when you file for bankruptcy. California residents cannot use federal exemptions. However, they still have a choice, because there are two systems for taking bankruptcy exemptions in California.
As explained by the California Courts, the state provides debtors with the following exemption options:
- Section 704. Filers can use this state exemption list for a number of purposes. It includes specific property up to a fixed dollar amount, certain household items and wearing apparel, health aids, tools of trades and a number of other items including qualified retirement plans.
- Section 703. This system only applies to bankruptcy filings, and the details vary from Section 704 — most significantly because Section 703 offers a homestead exemption. If you file out of state using California exemptions, some courts may disallow these exemptions.
The choice of system for Los Angeles bankruptcy exemptions may seem simple based on your financial situation. In addition to considering the type of property you currently own, you also need to think of other issues, such as whether you plan to liquidate your assets in Chapter 7 bankruptcy or use Chapter 13 or 11 to establish a repayment plan for consumers or businesses, respectively. A careful review of your circumstances with an experienced bankruptcy attorney can go a long way in helping you make the right choice.
For more than three decades, the Law Offices of Michael Jay Berger has helped individuals and businesses get out from under debt while protecting their assets. We have a clear understanding of the processes that help ensure your best interests are being upheld.