California’s New Homestead Exemption

California’s New Homestead Exemption Limit Allows More People to Keep Their Homes in Chapter 7 Bankruptcy.  A Chapter 7 is for consumers with limited assets or certain businesses that wish to liquidate or dissolve their operations. This chapter has a qualifying criteria for individuals (household income), and most debts are wiped out entirely.  A Chapter 7 is the “fresh start” bankruptcy, causing an individual to be free from most consumer debt.  While a Chapter 7 bankruptcy is commonly referred to as a liquidation bankruptcy, most individuals will not have to sell any of their possessions.

Asset Protection Through California Exemptions

Under California Law, there are a number of assets that are protected when you file for bankruptcy.  The homestead exemption protects the debtor’s home and its equity from being seized by creditors.  California’s homestead exemptions significantly increased in 2021 .  The homestead amount was increased to the median sales price of the county where the home is located, subject to a cap that is adjusted annually for inflation. The homestead exemption in California in 2021 had a minimum value of $300,000 and a maximum value of $600,000. Starting on January 1, 2025, the adjusted California homestead exemption minimum  is $361,113 and is capped at $722,151.  Therefore, homeowners may be able to file for Chapter 7 bankruptcy while keeping their home.

Even though a debtor may sell assets, the primary goal of Chapter 11  is to reorganize the debtor’s debt through a reduction in debt and a payment plan while allowing the debtor to continue in its pre-bankruptcy financial and business activities. The debtor continues to operate the business or occupation.

Chapter 7

California’s New Homestead Exemption Under Chapter 7 Bankruptcy.  Get a Fresh Start Today

START NOW