About California Bankruptcy Laws
In a economy where people are struggling to support themselves, many people are finding themselves having to file for bankruptcy. Bankruptcy laws are different in every state and it is important for anyone filing for bankruptcy to check the laws of their state before doing anything. Filing for bankruptcy does not have to be a scary experience if people educate themselves on bankruptcy laws.
Background Information
As of April 20, 2005 the California Bankruptcy Law Abuse Prevention and Consumer Protection Act were signed by the President of the United States. These new laws first took effect on October 17, 2005. The law requires any California resident to consult a certified credit counselor up to six months before filing for bankruptcy. Once a chapter seven bankruptcy law has been filed, California residents must file if they have overdo tax returns. This must be done within a few weeks of filing for bankruptcy.
Exemption Scheme # 1
California residents filing for bankruptcy can choose between two exemption schemes. The first exemption scheme allows for people to keep their home, provided they had less than $50,000 equity in the house before they filed for bankruptcy. Single people are also permitted to keep their house, as long as they are not disabled. A family filing for bankruptcy can keep their house as long as they have less than $75,000 equity in the house. The disabled and the elderly can keep their house if the equity in the house is less than $125,000. Anyone that is single and 55 or older, with an income less than $15,000 a year can keep their house as well as anyone who is married but makes less than $20,000 a year. This exemption scheme also allows people to keep their car as long as they have less than $1,900 in equity for their car. Items such as food, appliances, clothing and furniture can be kept if a California resident files for bankruptcy. Benefits including social security, disability, unemployment, veterans' and workers comp can also be kept. Under this exemption scheme, residents can keep no more than $2,000 worth of building equipment if they will use this equipment to make home improvements. Social security bank deposits of up to $2,000 can also be kept. Art, jewelry and family heirlooms can also be kept as long as the value of these items does not exceed $5,000 in value.
Exemption Scheme #2
The second exemption scheme allows California residents filing for bankruptcy to keep their house as long as the equity on the house is less than $18,450. Residents can also keep their car if they have less than $2,950 in equity on the car. Up to $1,225 worth of jewelry can be kept, as well as furniture, musical instruments, books and food as long as the value of each item does not exceed $475. Benefits such as social security, veterans', unemployment, disability and worker's compensation can also be kept under this exemption scheme. Any proceeds from life insurance as well as alimony can be kept by the resident once they have filed for bankruptcy. Any tools or equipment needed to perform the person's job can also be kept, as long as the value of those items does not total more than $1,850.
Whichever exemption scheme California residents choose, they can be assured that they will not lose everything they own due to bankruptcy.