If you are considering filing for Chapter 7 Bankruptcy, you are probably concerned that you might lose your home, your car, or other valuable possessions. Concerns about what you will lose if you file for Chapter 7 bankruptcy are understandable, but you should not let them stop you from speaking to an experienced bankruptcy lawyer. You may be able to keep your home and vehicle when you file for Chapter 7 bankruptcy; a skilled lawyer can help you understand the process and what assets you will get to keep. Filing for bankruptcy could change your life and help you start a new chapter.
In a Chapter 7 Bankruptcy, You Must Give Up Non-Exempt Property
Chapter 7 bankruptcies are often called liquidation bankruptcies. The bankruptcy trustee assigned to your case will take your non-exempt property, sell it for a fair market value, and then distribute the proceeds to all of your creditors. As a result, you will have to give up any property you own that does not qualify for an exemption under California law.
Once you have met all of the other requirements, such as attending your creditor meeting and telling the court how you plan to pay for your secured debts, you will receive a bankruptcy discharge. Typically, the bankruptcy discharge comes around four to six months after you submit your petition for bankruptcy. At the end of that process, if your creditors have been paid in full, you will be able to keep any remaining non-exempt property.
What Qualifies as an Exempt Property?
As mentioned above, you will be able to keep the exempt property after a Chapter 7 bankruptcy. You will not lose everything during the bankruptcy process. If you lived in California for at least two years when you file, you will have to use one of California’s sets of exemptions and you cannot use the federal exemptions. California does provide a homestead exemption. Homeowners can exempt at least $300,000, and potentially as much as $600,000 depending on the median sale price for homes. California also allows a specific amount of exemption for the following:
- Motor vehicles: between $3,050 and $5,350 in equity
- Personal property such as household items, jewelry, health aids, cemetery and burial plots
- Bank deposits from Social Security payments
- Bank deposits from other public benefit payments
- Personal injury recoveries
- Retirements and pensions
- Unemployment compensation, Social Security, veterans’ benefits, public assistance
- Tools of the trade
- Alimony and child support
Consult With our Bankruptcy Lawyers in San Diego Today
California has one of the most complicated systems for bankruptcy exemptions. There are two different sets of exemptions and you will have to choose one of them. The choice you make will affect how much of your property and assets you can exempt. The experienced bankruptcy lawyers at Bankruptcy Law Center can help you understand the Chapter 7 bankruptcy process and walk you through it so you do not feel overwhelmed. Contact us today to schedule your initial consultation.