One common bankruptcy myth that floats around is that you will lose all of your property, including your home, if you file for bankruptcy. This is far from the truth and in most cases, debtors do not lose their home, car or much of their property at all when they file. California has bankruptcy exemptions that protect people filing for bankruptcy from losing all their property. The first matter to consider when trying to determine what property you can lose is which type of bankruptcy you are looking to file for. If you are filing for a Chapter 13 bankruptcy, you generally will not need to worry about losing any property. The process of a Chapter 13 involves putting a debtor on a debt repayment plan so they can repay their creditors. In doing so, asset liquidation is not necessary because the creditors are receiving payment.
Chapter 7 bankruptcy, on the other hand, may involve some sort of asset liquidation due to the fact that the debtor is discharged from their debts. Even so, there are restrictions to the property that can be liquidated in bankruptcy. When it comes to your home, a certain amount of equity in your principal residence is protected. You are able to exempt real or personal property that you reside in when you are filing for bankruptcy. The amount varies:
Family where at least 1 member has no interest in the homestead- $100,000
65 years and older or disabled- $175,000
To discuss your unique bankruptcy and the property that is exempt in your case, contact the Law Offices of Rick D. Banks. I have been assisting clients in their bankruptcy cases for 12 years and am familiar with the homestead exemptions in California. Contact me now to get started and set up a consultation.