It’s not as though you won’t have living expenses after you file bankruptcy.
You need to know how you’ll manage and what you’ll have to manage with.
Funding that fresh start is what exemptions are all about.
We are talking here about California because exemptions, the laws that govern what you can keep for your fresh start., are unique to each state.
Exemptions are the one part of bankruptcy that is explicitly different from state to state. So, recognize that the rules we’re talking about here apply in California.
California exemption systems
California has two distinct exemption schemes that you can choose from. And you have to choose one or the other.
You can’t take one exemption from one set and another exemption from the other set.
The exemptions originally enacted in California were big on protecting homes, so we have generous homestead exemptions under generally applicable state law. That system is found in California Code of Civil Procedure 704 and the statutes that follow it.
California also has a second system of exemptions available only for its residents who file bankruptcy. These are found in CCP 703.140.
We’re going to look closely at the California bankruptcy exemptions (CCP 703.140) on the question of how much cash you can protect, because the 704 exemptions aren’t very generous once you move beyond protecting equity in a house and retirement payments. Here’s an online summary of these exemptions. [Read more…]