Filing Chapter 7 Bankruptcy in California as a Homeowner

Filing chapter 7 bankruptcy in California may provide the homeowner with some outstanding protections. Bankruptcy law within the state provides individuals with exemptions towards the home that are often significant. However, with estate values in California being significantly higher than other states, it is still important to consider if your home is protected. The best route to take is to hire an attorney.

Understanding the Homestead Exemption in California

Although bankruptcy filers in California can select between federal and state exemptions, most select the state's exemptions because they provide a larger level of protection of homeowners. Keep in mind, California citizens can choose between the state's two sets of exemptions as well. Take a closer look at the homestead exemption options.

• Real property up to $50,000 is protected for single individuals, or $75,00 for families for one homestead. This applies to property that the individual occupies such as a boat, mobile home, community apartment or other similar structures.
• For those age 65 or older, a limit of exemption is up to $125,000 worth of equity.
• For those who are physically or mentally disabled, the state provides an exemption value up to $100,000.
• For those who are single, earning under $15,000 or married earning under $20,000 and 55 years of age at least, $100,000 worth of exemption is available.
• Six months after received, sale proceeds are exempt from bankruptcy protection.
• Under the second set of exemptions, the property owner can select property valued up to $17,425 and then any unused portion of homestead can be applied to other types of property. There is also a small wild card exemption available in this system as well.

Those who have a significant amount of equity within the home may wish to use the first system to file for Chapter 7 bankruptcy. However, it is also important to keep in mind that this homestead exemption does not cover all equity, only up to the limit. A homeowner may still face foreclosure if he or she is not up to date on the property's payments.

Hiring an Attorney

When filing Chapter 7 bankruptcy in California, individuals should hire an attorney for the process. The attorney will work with the individual to ensure that as much of the home's value as possible is protected under the bankruptcy filings. Keep in mind that an attorney can help ensure the process goes smoothly. The attorney will provide legal representation in a court of law as well.