Share on Facebook
Share on X
Share on LinkedIn

By: William Winfield, Esq.

When a person files for bankruptcy protection, his or her assets must be collected by the bankruptcy trustee and liquidated to reimburse debtors before the petitioner’s debts can be discharged. In order to keep bankruptcy petitioners from falling below the poverty line, there are certain assets that can be retained as exempt. This is not an exhaustive list, but covers the most commonly used federal bankruptcy exemptions.

1. Homestead exemption: If a bankruptcy petitioner owns a home, he or she may protect equity in the home. The amount of this exemption in California can range from $22,975.00 to $175,000.00 worth of equity in the home. The amount of the exemption depends on a number of factors including whether a family member lives in the home, age of the home owner, whether the owner is disabled etc., and whether the Debtor is filing using Federal or State exemptions. This issue needs to be carefully considered with legal counsel.  If a Debtor owns no home or has no equity, the Debtor can claim a miscellaneous exemption of up to $22,975.00 which will be allocated to other property of the Debtor.

2. Vehicle exemption: Throughout much of the country, it is difficult to work or earn money without an automobile. Federal law allows a person to keep his or her automobile with a value up to $3,675.00. If the car is worth more than the amount allowed by the exemption, an individual may seek additional funds from other exemptions to keep the asset. Alternatively, the vehicle will be sold and the exemption amount given to the petitioner.

3. Personal property exemptions: These include $1,550.00 for jewelry, $2,300.00 for specialized tools and educational materials related to employment, and $12,250.00 for household goods, appliances, furnishings, clothing, etc.

4. Personal Injury exemption: The proceeds of a personal injury award may be held as exempt up to $22,975.00.

5. Wildcard exemption: A person is permitted to exempt as much as $1,225.00 for any other property he or she wants to keep after the bankruptcy above the other exemptions. This can be applied to increase the amount permissible to another exemption, most commonly the vehicle exemption. If the petitioner so chooses, he or she may opt to use the exemption on liquid assets, leaving the petitioner with more cash on hand after the bankruptcy is complete.

There are a number of other exemptions which may apply. Since situation is different, it is highly advisable to consult with legal counsel before filing bankruptcy. States may make other exemptions available or use different values than the federal exemptions. If you have questions about bankruptcy, contact experienced bankruptcy attorney, William Winfield at

About the Author
Theodore J. Schneider practices in the areas of business and corporate transactions, employment law counseling, municipal and public law, real estate and land use, and homeowner associations. Ted began his legal career in 2002 when he joined the Los Angeles office of Gibson, Dunn & Crutcher, L.L.P. before relocating to Ventura County to join his father in practice.