Can I Keep My House If I File Bankruptcy in California?
Whether or not you can keep your house after filing a California bankruptcy case really depends upon the type of bankruptcy you declared, how long you've lived in the state and your financial situation. If you file Chapter 7 to liquidate existing debts, you're more likely to lose your home than if you elected a Chapter 13 partial debt repayment plan, which guarantees you being able to keep your home.
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Exemptions System No. 1
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Californians must have lived in the state for at least two years to declare its bankruptcy exemptions. As of 2011, California offers its residents two systems of bankruptcy exemptions, according to Bankruptcy Action. Under system No. 1, single Golden State residents who are not disabled can retain up to $75,000 of personal property, including a home. Someone over the age of 55 or who earns less than $15,000 annually can keep up to $100,000 of real estate equity using this exemption system. Disabled people and California residents over the age of 65 can retain up to $150,000 in property value.
Exemptions System No. 2
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California's exemptions system No. 2 is not as favorable to homeowners. As of 2011, people choosing this system can only retain up to $20,725 of personal property including any homestead equity. But they also can claim a "wild card" exemption of $21,825 and use that to retain any other assets they wish, including real estate interests.
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Other System No. 1 Property Exemptions
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Californians choosing system No. 1 for asset exemptions can also keep all clothing, property or food needed. Deposit accounts that receive Social Security benefits are exempt from bankruptcy liquidation as long as a single person doesn't have more than $2,700 in the account or a couple doesn't have more than $4,050 in the account. Californians can keep larger deposit accounts if they can prove that all of the funds are due to Social Security or other types of public benefits. This asset exemption system also allows state residents to keep all personal injury awards and up to $6,750 of jewelry, art and family heirlooms.
Other System No. 2 Property Exemptions
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California asset exemption system No. 2 also enables state residents to retain all pensions, familial support and public benefits. But people using this system in their bankruptcy cases can only keep up to $20,775 in personal injury recoveries. State residents can retain up to $3,300 of motor vehicle equity, up to $1,350 worth of jewelry and $2,075 in tools needed for professional work.
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