Depending on the amount of equity in your home, it may be exempt when filing for Chapter 7 bankruptcy. You have two state exemption systems to choose from (systems one and two) and each has a different exemption amount for homesteads. Federal exemptions are not an option in our state.
The Code of Civil Procedure outlines the state homestead exemption. System one accounts for variables such as whether you live with a family member, are a senior (65 or older), or are mentally or physically disabled. Your gross annual income is also a factor. The homestead exemption was last updated in 2013 and the schedule for the next modification in exemption figures is 2016. The following are the current guidelines for the homestead exemption under system one:
Home Exempt Qualifications
- Exemption for single homeowners — $75,000
- Exemption for homeowners living with a family member — $100,000
- Exemption for someone 65 or older or mentally disabled — $175,000
- Exemption for someone 55 or older earning a gross annual income less than $25,000 or married and earning a gross annual income less than $35,000 — $175,000
Keep Your Home In a Bankruptcy Filing
Under system one, state law considers a homestead as real or personal property that is a residence (like your Bakersfield, California home), including mobile homes, boats, community apartments, condominiums or planned developments. If you sell your homestead through a forced sale six months prior to filing for bankruptcy, the exemption applies to the proceeds.
System two allows a maximum fixed homestead exemption of $25,575 from the equity in the home. Under this system, the exemption is for real or personal property used as a residence or burial plot by the debtor or debtor’s dependent(s).
While many states let married couples double the homestead exemption, this option is not available in Bakersfield California or the rest of the state.
You should discuss exemptions with your Bakersfield bankruptcy lawyer when deciding which type of bankruptcy to file. A seasoned bankruptcy attorney can thoroughly review your financial situation and inform you of all the factors that relate to filing for bankruptcy.
If you are facing overwhelming debt and considering Bankruptcy, contact Max Gardner at The Law Offices of Young Wooldridge, LLP for a free consultation.
