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What are exemptions in bankruptcy?

On Behalf of | Sep 21, 2022 | Bankruptcy

If you decide to file bankruptcy, you may worry about what will happen with everything you own. The whole idea behind the process is to liquidate your assets to repay your debts. But at the same time, the court does not want to leave you without anything.

To enable you a better chance to start over after the bankruptcy, the Code of Civil Procedure allows you to have exemptions, which are assets you get to keep.

Basics

To take exemptions, you will need to include the information on your bankruptcy petition. Remember that if you do not include something in your filings, the court will be unaware and not consider it. The same is true for exemptions.

Ideally, you want to exempt as much personal property as possible so that you can start over after your case is finalized. California provides you with two sets of exemptions from which to choose. You can use whichever works best for your situation. Take time to consider your options and look into what is most beneficial.

Exemption examples

Exemptions will cover a range of assets that you might need to hold onto moving forward. For example, you can exempt a vehicle with a value of up to $3,325. Generally, you can keep all reasonable household goods without having to itemize them or give values. Certain personal items, though, may have a limit. For example, if you have art, heirlooms or jewelry, you can keep items for a combined value of up to $8,725.

You should carefully consider your exemptions to maximize what you can keep. Understand that anything not exempt is fair game for the court to take and sell to pay back your debts.