What are Exemptions?

I’m sometimes guilty of using words that are not widely known or the word has a different meaning in bankruptcy. One of the words that bankruptcy attorneys use all of the time is “Exemptions.”

Most people think about taxes when they hear the word exemption, like your personal exemption amount on your income taxes every year. In bankruptcy, exemption refers to property that you are allowed to keep and the property cannot be sold to benefit your creditors. Exemptions are pretty important to make sure that you can keep things like your car, household goods, and possibly some emergency cash. Knowing which exemptions to use is also very important.

In California, there are actually two sets of exemptions available and you must choose one set or the other. In other words, you can’t choose some exemptions from one set and other exemptions from the other set. §704 exemptions are the ones usually used to protect equity in a home. If you have no equity in your home (which is very common these days in California), then chances are §703 exemptions are the ones that you are going to want to use because of the “wildcard”. The wildcard allows you to protect up to approximately $23,250 of any type of property, including cash.

A bankruptcy attorney’s job is not to simply prepare a bunch of paperwork for you. My job is to help you understand how the bankruptcy process works, explain your options (including exemptions) for the property that you own, and help you make a fresh financial start. Please feel free to contact me to schedule an appointment to discuss your options.

This is just a basic overview and is not legal advice specific to your situation. If you are considering bankruptcy or are feeling overwhelmed by debt, you should speak with an attorney in your area for legal advice. To speak with me regarding your situation, please email me at jen@jenleelaw.com or call 925-586-6738.